German Federal Court ruling banning “narrow” rate parity clauses brings fresh relief for hoteliers…

On 19 May, the German Federal Court of Justice (Bundesgerichtshof) declared that the 'narrow' best-price clauses imposed on hotels by the Booking.com reservation portal violate antitrust law.

Booking.com, the overwhelming market leader among hotel reservation portals in Europe, will no longer be permitted to prevent hotels in Germany from advertising lower room rates on their own websites. Hotels in Germany will now be in a position to offer better prices through their own websites if they wish, to the benefit of both hotels and consumers.

Hotelverband Deutschland (German Hotel Association - IHA) initiated the Competition Office case against Booking.com with a complaint in the autumn of 2013. In a cease-and-desist order issued on 22 December 2015, the Federal Cartel Office prohibited any further use of the reservation portal's best-price clauses, covering both the wide parity clause (no more favorable prices available on any other reservation channel) and the narrow parity clause (no more favorable prices available on the hotel's own website).

The German Federal Cartel Office is the first competition authority in the world to have correctly classified the narrow parity clauses used by Booking.com since the summer of 2015 as a violation of antitrust law. Booking.com's appeal against this decision had been surprisingly successful at first instance before the Higher Regional Court of Düsseldorf on 4 June 2019.

On 14 July 2020, the Federal Cartel Office secured a review by the Federal Court of Justice (Bundesgerichtshof) of the favorably ruled Düsseldorf decision by way of a non-admitted appeal.

In Europe, bans on narrow rate parity provisions have been prohibited by law in Austria, Belgium, France and Italy. Hotel reservation portals, and Booking.com in particular, nonetheless continued to operate strong and healthy businesses in these countries. Switzerland is expected to be the next European country to ban such practices.