On the 21 April 2015 it was announced that booking.com had reached a settlement with the Italian, Swedish and French competition authorities. The actions were a co-ordinated approach with the European Commission to examine online hotel booking and the wide use of best price clauses by the hotel booking websites. We have reported on these developments several times over the last year including in this post.
Booking.com has reached this settlement as the dominant player in European online hotel booking. Under the terms of the settlement, it is reported that booking.com has agreed to only use ‘narrow’ best price clauses, rather than ‘wide’ clauses in Sweden, Italy and France. Narrow clauses mean that booking.com will always guarantee the best price for that hotel in comparison with the hotel’s own website. However, other hotel booking websites will still be able to strike deals with hotels to better the deal made on booking.com.
In a ‘wide’ best price clause by comparison, the hotel booking website is guaranteed the best price clause in any situation by the hotel, meaning no one else can make as good as good an offer to consumers. There were concerns by the regulators that these wide type clauses meant that the guaranteed lowest price was in turn becoming a fixed minimum price and new, lower cost entrants to the market were not able to impede upon the market share of the dominant players.
It is believed that booking.com will make further settlements such as this with the Dutch and UK competition authorities who have also shown interest in examining the effect of best price clauses in the online hotel booking industry.
It is reported that whilst the promise by booking.com to alter its terms has appeased regulators, rivals believe booking.com’s dominant position in the market will continue and that consumers are unlikely to shop around on other websites now that they are familiar with using booking.com, perhaps representing the proverbial: “the stable door has been shut after the horse has bolted”.