- Kartellamt Prohibits Best-Price Clause on Hotel Reservation Portals
- February 24, 2016
- Law Firm: GRP Rainer LLP - Cologne Office
The Bundeskartellamt (German Federal Cartel Office) has prohibited a hotel reservation portal from using so-called “narrow” best-price clauses, arguing that they restrict competition.
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: The use of best-price clauses has long been controversial and a thorn in the side of competition watchdogs. These provisions can constitute an infringement of competition law because they are capable of hampering free competition and ultimately harm consumers.
The dispute between the Bundeskartellamt and the hotel reservation portal has also been going on for some time. The portal initially compelled hotels to indicate the lowest room price, the maximum number of rooms available and the most favourable booking and cancellation conditions. This obligation applied to all booking channels (broad best-price clause). The portal eventually permitted the hotels to release more attractive offers on other portals, yet any prices featured on their own websites were still not allowed to be lower than those on the portal (narrow best-price clause).
However, the Kartellamt took the view that even this narrow best-price clause still constituted a restriction of competition, stating that it hampered competition both between the rival portals as well as between the hotels. It went on to say that this ultimately also harms consumers, as hardly any incentive remains for hotels to offer their rooms via other new platforms at a lower price so long as the hotels were not allowed to change their prices on their own websites. Moreover, it claimed that this would also make it more difficult for new providers to enter this market. The competition regulators have therefore demanded that the clauses in question be removed from the agreements and general terms and conditions by the end of January 2016. The portal can appeal this order and apply for interim legal protection against its immediate enforcement.
The Kartellamt has already forbidden these kinds of best-price clauses on other portals.
Infringements of competition law may be met with severe punishments, including formal warnings, claims for damages and injunction suits.
Businesses can turn to lawyers who are competent in the fields of competition law and intellectual property law to enforce or fend off these types of claims.