Soon we will be allowed to travel everywhere again. Hopefully without the fear of corona and without a guilty conscience.
Just in time for our travel plans, the German Federal Court of Justice (BGH) has announced an interesting ruling:
1. The decision of the BGH from 18 May 21
The booking platform Booking.com may not prohibit the providers (hotels and other accommodations) represented on the portal (platform) from offering customers better conditions on the hotels’ own website than on Booking.com, i.e., for example, more favorable prices.
The so-called best price clause contained in the (former) contracts of Booking.com with the hotels is invalid.
2. The relevant legal considerations
Such best price clauses constitute restrictions of competition. By prohibiting hotels from offering customers better conditions on their own hotel website than on Booking.com, the hotels’ freedom of competition is restricted. This causes disadvantages for the hotels, the hotel customers and for the free market.
The restriction of competition cannot be justified by the fact that it is allegedly necessary for the “survival” of the portal, as this would be the only way to get the “free rider problem” under control (customers inform themselves on Booking.com and then book directly on the hotel website).
The BGH (court) does not see a significant threat to the efficiency of Booking.com without the best price clauses.
3. Which are the relevant legal provisions by the way?
The relevant legal norms in this regard are not found in the German Civil Code (BGB) or the German Commercial Code (HGB), but somewhere else entirely: namely in European antitrust law.
Article 101 TFEU (Treaty on the Functioning of the EU) prohibits such restrictions of competition. It used to be called Art. 81 TEU (Treaty on EU); and very early on, when I was a student, it was Art. 85 TEU. Later, the provision was moved to Art. 81 TEU, and today it is to be found in Art. 101 TFEU (= Treaty on the Functioning of the European Union). In my opinion, this does not serve the purpose of clarity, but what the heck. …
So we are dealing here with antitrust regulations. Antitrust law is largely shaped by European law, so that German antitrust law, codified in the GWB, is no longer of great importance in my opinion.
Independently of this, Booking.com is of course active throughout Europe, even worldwide, so that European antitrust law is certainly applicable for this reason.
It is an interesting question whether the case is also an issue for the US antitrust authorities. But we’ll leave that for now. …
4. A question of systematics
Instead, let’s take a closer look at the BGH’s reasoning from a systematic point of view.
a) According to Art. 101(1) TFEU, restrictive agreements are incompatible with the internal market and therefore prohibited; according to paragraph 2 they are void.
The agreement between Booking.com and the participating hotels that the hotels are not allowed to offer their customers more favorable prices on their own websites than on Booking.com is clearly restrictive of competition. No doubt about that.
The OLG Düsseldorf (higher regional court) already wanted to consider in the context of Art. 101(1) TFEU that ancillary agreements restricting competition which are necessary to ensure a main purpose of the agreement which is neutral under antitrust law are not inadmissible. In other words, a teleological reduction of paragraph 1. But the BGH on appeal did not go along with this. In the context of paragraph 1 TFEU, it is only a question of whether an agreement is restrictive of competition.
b) Exceptions to the prohibition of restraints of trade are then regulated in Article 101(3) TFEU, i.e. in the third paragraph of this provision. These exceptions can either be made on a group basis, i.e. by means of a so-called block exemption regulation (Gruppenfreistellungsverordnung), or on a case-by-case basis (individual exemption). But only if the conditions set out in the relevant block exemption regulation and/or in Article 101(3) TFEU are met.
In this case, a block exemption under the so-called Vertical Block Exemption Regulation (Vertical BER/Vertikal GVO) would come into question. According to this regulation, however, an exemption is excluded if the supplier’s share of the relevant market amounts to 30% (or more) (see Art. 3 of the Vertical Block Exemption Regulation). This is the case with Booking.com. For this reason, an exemption according to the Vertical BER is out of the question from the outset due to the “market power” of Booking.com.
An exemption in individual cases would still be possible. However, according to 101 (3) TFEU, this requires that the restriction of competition is indispensable to bring about – to put it simply – advantages for consumers. Such advantages in this case would be the fact that Booking.com offers the customer a comfortable tool for “searching, comparing and booking” (advantages of efficiency). But this is rejected by the BGH in its ruling based on the reasoning that the best price clause is “not indispensable” for this.
c) The result is therefore a restriction of competition. This is prohibited, as there is no exception permitted either by a block exemption or by an individual exemption.
5. Course of proceedings
The eventful history of this legal case is also quite interesting.
First of all, the lawyers for Booking.com apparently thought that such a best price clause is legally permissible. At least the chances seemed so good to them that one could give it a try.
The Federal Cartel Office (Bundeskartellamt, BKartA) then took action against this and prohibited Booking.com from using the corresponding best price clause.
Booking filed a complaint against this ruling, and the Cartel Senate of the Düsseldorf Higher Regional Court ruled in favor of Booking.com.
For the time being, the last step: The Federal Court of Justice (Cartel Senate) has overturned the decision of the Higher Regional Court of Düsseldorf on the appeal of the BKartA, so that as a result the best price clause of Booking.com remains invalid.
What happens now, will Booking.com accept the BGH decision? Since we are dealing with European law here, I do not think it is impossible that the case will also go to the ECJ.
This case shows very clearly that even competent lawyers, authorities and courts can come to very different results in the legal assessment of a matter.
6. Effects for us as consumers
For us as travelers, the ruling shows that it makes sense not only to look at the hotel offers on Booking.com, but also to take a look at the websites of the hotels themselves. Maybe you will find better prices there.
As for me, I personally have often made the experience, at least this is my impression, that you do not necessarily get the nicest rooms when booking through a booking portal. So if you like to spend the night on an upper floor with a balcony and a view of the sea, it may well be worth calling the hotel reception directly and not limiting yourself to the 2 or 3 clicks on the booking portal, even if that is of course the most convenient way of booking.
With this in mind, I hope you enjoy planning your vacation.
