On 20 July 2018, the Swedish Patent and Market Court ("Court") found that so-called narrow vertical price parity clauses in contracts between Booking.com and hotels in Sweden, which prevented the hotels from setting lower prices on their own websites than those advertised on Booking.com's platform, infringed Article 101 TFEU and its Swedish equivalent.
In its ruling addressing an action brought by the Swedish tourism industry organisation Visita, the Court acknowledged that the Swedish Competition Authority, after an investigation coordinated with several other European competition authorities, had not objected to these contractual restraints (and had only objected to restrictions on the hotels' right to set lower prices on other booking platforms, i.e., so-called wide price parity clauses). Nevertheless, the majority of judges found that Visita had demonstrated that the narrow vertical price parity clauses had the effect of restricting competition both on the market for hotel booking services as well as on the market for hotel rooms. In particular, the Court held that the narrow vertical price parity clauses not only prevented hotels from offering lower prices on their own websites, which they would have done absent the challenged restraints, but also reduced the incentives of hotels to offer prices on rival booking platforms lower than the prices offered on Booking.com's platform (because the narrow price parity clauses would prevent the hotels from matching those lower prices on their own websites, thereby damaging their own competiveness). The majority also found that Booking.com had not met the burden of proving that the narrow vertical price parity clauses fell outside Article 101 TFEU because they should be considered an ancillary restraint, or that they benefitted from an Article 101(3) exemption.
The Court ordered Booking.com and its Swedish subsidiary to remove the vertical price parity clauses from all contracts and to refrain from creating equivalent incentives for hotels to maintain price parity between their websites and Booking.com's platform. In case of non-compliance within three months of the date of the judgment, Booking.com and its Swedish subsidiary will have to pay 30 million SEK (€2.9 million) and 5 million SEK (€485,000) respectively.
The judgment represents a further hardening of approach to so-called narrow price parity clauses, which has occurred in a number of Member States through either the adoption of targeted legislation, enforcement action by a competition authority or, as in the case of Sweden, a ruling by the national courts.
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