BGH overturns Booking.com’s best price clause

Not cheaper than at Booking.com – hoteliers should stick to this for room prices on their own website. The BGH has now prohibited this. Hotels are cheering at the end of a year-long dispute.

Defeat suffered: The Best Price Clauses from Booking.com have been overturned by the BGH.

TRiumph for German hotels compared to the booking platform Booking.com: The Federal Court of Justice (BGH) has forbidden Booking to oblige hoteliers to provide the portal with the most favorable conditions and not to offer rooms cheaper on its own website.

At the heart of the dispute was the best price clauses that Booking.com used in its general terms and conditions from July 2015. With the so-called “narrow” clause, the portal also wanted to prevent guests from finding out about hotel offers on the platform and then luring them to the hotel’s own website through lower prices or better contractual conditions in order to book directly there. Then the portal does not receive any commission. According to previous investigations by the Federal Cartel Office, the base commission is usually between 10 and 20 percent of the room rate.

A dispute that lasted for years ends with the decision of the BGH. In the beginning there were the so-called “wide best price clauses”. Accordingly, a room should not have been offered anywhere cheaper than on the mediation platform. This practice was initially prohibited to the booking competitor HRS. Booking.com switched to the “narrow best price clause”. Accordingly, the prices were allowed to vary between different portals. And at the reception, a hotelier could verbally offer a different price, but he should continue to be prohibited from advertising on his own website.

In 2015, the Cartel Office saw clauses as illegal

In December 2015, however, the Bundeskartellamt determined that such a “narrow” best price clause was also contrary to antitrust law and prohibited its further use. Booking.com took action against this and was initially right. In June 2019, the Higher Regional Court (OLG) Düsseldorf revoked the authority’s order. In the opinion of the Cartel Senate, “narrow” best price clauses impair competition, but as necessary ancillary agreements in the brokerage contracts with the hotels, they are not covered by the cartel ban.

These agreements are necessary in order to “prevent disloyal behavior by the hotels”, emphasized the Düsseldorf Higher Regional Court at the time in its decision. Hotel industry officials have denied that there are many such “free riders” cases. The Cartel Office also stuck to its position and pursued – ultimately successfully – the goal of reviving the original ban on the best price clauses.

The Bonn competition authority welcomed the decision of the Federal Court of Justice.Best price clauses can impede competition between platforms. They can be to the detriment of providers – like hoteliers here – and mean higher prices for consumers, ”said President Andreas Mundt.

Setback for Booking.com

He pointed out that Amazon had given up similar clauses for dealers on its marketplace in 2013 following the intervention of the Federal Cartel Office. In other European countries, best price clauses have even been prohibited by law. “The Federal Court of Justice has paved the way for us to have a differentiated antitrust look at such clauses depending on the industry and market position of the platform,” said Mundt.

For the platform, however, the BGH ruling is a setback. Booking.com announced that it was “disappointed with the decision” because the court had recognized in the hearing that “Booking.com should indeed be appropriately compensated for the demand that is created for accommodation partners.” also contradicted the view that best price clauses would often be illegal elsewhere. “There are several examples of competition authorities who have classified parity practices as fair, for example in Sweden, France and Italy.” Now a patchwork of regulations remains. “Unfortunately, today’s decision increases the legal fragmentation in the EU and runs counter to the interests of consumers and small, independent accommodations.”

Booking boss Glenn Fogel defended in an interview with the FAZ months ago that hoteliers were obliged to grant certain conditions. “If someone doesn’t like this, that’s fine with me. He can try to market rooms through our competitors. ”In his view, hoteliers would not get better sales opportunities there.

Fogel feared that hoteliers would freeze the platform’s business. “If a room on a portal costs 100 euros, but the hotel advertises it for 95 euros, this reduces our business because we had to invest a lot to make the accommodation visible to consumers – which is then not paid for,” he says. “Everyone would then book for 95 euros, me too.”

Hoteliers now see “fair competition”

In view of the long dispute with many twists and turns, the IHA hotel association was relieved. “The Federal Court of Justice finally brings legal certainty to market participants in Germany and enables fairer competition in online distribution,” said IHA chairman Otto Lindner. The association triggered the antitrust proceedings against Booking with a complaint in autumn 2013.

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You see yourself in your own legal opinion “fully confirmed that the contractually imposed by Booking.com and other hotel booking portals and sometimes openly, sometimes subtly requested narrow and wide parity clauses represent obstacles to competition,” said IHA Managing Director Markus Luthe. One counts on the fact that Booking will now “also give up further attempts at competitive gagging or deceit of its hotel partners”.