Competition
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José María Camarero
Madrid
Tuesday, 30 July 2024, 13:58
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Spain's National Market and Competition Commission (CNMC) has fined the Booking.com portal 413 million euros for abusing its dominant position and infringing the Antitrust Law and the Treaty on the Functioning of the European Union. In the CNMC's view, the travel booking company committed two abuses of its dominant position from at least 1 January 2019 to the present day by imposing several unfair commercial conditions on hotels located in Spain that use its booking intermediation services and restricting competition from other online travel agencies offering the same services.
Therefore, the CNMC imposed two fines of 206.62 million euros on Booking.com for each of the single and continuous infringements of abuse of dominance: the imposition of unfair trading conditions on hotels located in Spain; and the restriction of competition from other online travel agencies in offering online intermediation services for reservations to hotels located in Spain, respectively.
Specifically, the CNMC considered that Booking applies a pricing clause to hotels that want to appear on its website that prevents them from offering their rooms on their own pages below the price they offer on Booking.com itself, while Booking.com reserves the right to unilaterally lower the price that hotels offer through Booking's website or application.
Furthermore, several clauses are laid down whereby only the English version of Booking.com's General Terms and Conditions (GTC) has legal force; the law applicable to the GTC is the law of the Netherlands; and the courts of Amsterdam have jurisdiction in the event of a dispute between the parties.
In addition, it noted that there was a lack of transparency in reporting on the impact and cost-effectiveness of subscribing to the Preferred, Preferred Plus and Genius programmes. These programmes allow subscribing hotels to improve their ranking in Booking.com's default results ranking, in exchange for a higher commission or to offer discounts on the best-selling or cheapest room the hotel has on Booking.com.
The CNMC considered that by restricting competition from other competing online travel agencies using the following formulae. For example, the use of the total number of bookings of a hotel through Booking.com as a positioning criterion in Booking.com's default results list. This incentivises hotels to concentrate their online bookings only through Booking.com, preventing competitors from entering or expanding in the market.
In addition, the use, as a criterion for accessing and remaining in the Preferred and Preferred Plus programmes, of a performance requirement based primarily on the profitability of each hotel for Booking.com. This encourages hotels wishing to enter or remain in the programmes to follow a pricing and availability policy that leads them to concentrate their sales on the platform, to the detriment of other competing agencies.
The unfair trading conditions prevent hotels from offering cheaper prices for their rooms on their own websites, while Booking.com reserves the possibility to undercut the room price that the hotel publishes on Booking.com. In case of disputes over General Terms and Conditions (GTC), they cannot go to the Spanish courts and must use Dutch law, which generates inequitable litigation costs.
The lack of transparency prevents them from making informed decisions on whether or not to subscribe to the Preferente, Preferente Plus and Genius programmes, which are very relevant for hotels located in Spain.
The CNMC ruled that total use of hotel bookings on Booking, as a criterion for positioning in Booking.com's predetermined results ranking, and the use of a performance requirement - profitability of each hotel for Booking - to access or remain in Preferred and Preferred Plus, restrict competition from other online travel agencies and result in hotels not being able to access better commercial conditions in the provision of online booking intermediation services.
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