Hotel associations across the EU are preparing legal action against Booking.com in a coordinated effort led by HOTREC, the umbrella association of hotels and restaurants in Europe. The Cyprus Hotel Association has declared its support for the initiative and has called on its members to join the process before the end of July. This collective response is grounded in the recent judgment of the European Court of Justice (ECJ), which addressed the legality of Booking.com’s parity clauses. The case originated in a Dutch court that submitted preliminary questions to the ECJ seeking clarification on whether using narrow price parity clauses in Booking.com hotel agreements amounts to anticompetitive behaviour, violating Article 101(1) TFEU.
Background and legal questions
The preliminary reference came from the District Court of Amsterdam, where Booking.com sought legal validation of its narrow parity clauses. These clauses prohibit hotels from offering lower prices on their websites than those displayed on Booking.com. Booking.com justified this restriction as necessary to prevent “free-riding“ by hotels that might benefit from the platform’s visibility while avoiding commission fees. While wide parity clauses, which restricted better deals on competing platforms, have largely been deemed anticompetitive throughout the EU, narrow versions remained uncertain until now.
The Dutch Court referred two key questions to the ECJ. First, it asked whether narrow parity clauses could be considered ancillary restraints that fall outside the prohibition of Article 101(1) TFEU. Second, it requested guidance on how the relevant market should be defined.
Ancillary restraints and Booking.com’s clauses
In its judgment delivered on September 14, 2024, the ECJ took a firm stance. Regarding the first question, the Court clarified that for a restriction to qualify as ancillary, it must be indispensable to the agreement’s existence or the economic activity it facilitates. In the context of digital platforms, this means the measure must be essential not just for a specific business model but for the overall functioning of the platform as a legal and economic entity. The Court found that narrow parity clauses do not meet this high threshold. While they may support Booking.com’s commercial interests, they are not essential for its viability or creation. Therefore, the ancillary restraints doctrine does not provide protection. This interpretation significantly limits the applicability of the ancillary restraints doctrine to platform business models. It signals that any argument based on ancillary restraints must directly support the foundational structure of the platform rather than merely its operational preferences.
The role of market definition
On the second question, the ECJ refrained from delivering a concrete market definition but reiterated the principles from the Commission’s updated Market Definition Notice. While this guidance leaves final decisions to the national Court, it provides a framework for consistency. For Booking.com to benefit from the VBER exemption, a broad market including offline booking channels or non-platform competitors would need to be defined — a scenario unlikely in light of Booking.com’s dominant position and its designation as a gatekeeper under the Digital Markets Act.
The decision implicitly suggests that a narrow market, limited to online travel platforms, is more appropriate. In such a market, Booking.com is unlikely to fall below the 30% threshold required for VBER exemption, making its parity clauses vulnerable to challenge.
Implications for enforcement and litigation
This ruling carries two significant implications. First, it underscores the limited availability of the ancillary restraint doctrine in defending digital platform practices. Arguments invoking ancillary restraints must now align closely with what is indispensable for a platform’s structural function. Second, the Court’s handling of market definition elevates the evidentiary value of definitions developed in related public or regulatory proceedings. This could lower the burden of proof in private enforcement cases, facilitating greater coordination and consistency across jurisdictions.
In the wake of this judgment, coordinated legal actions by hotel associations signal the beginning of a new wave of private enforcement across Europe. As national courts take up these cases, the ECJ’s guidance will serve as a central reference point for assessing the legality of parity clauses in digital platform agreements.
