Most Favored Nation Clauses: A French Perspective on the Case

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Olivier Billard, Pierre Honore, May 15, 2015

As e-commerce is soaring, competition authorities across Europe are paying increased attention to the commercial practices of companies regarding their online sales. This trend in enforcement priorities is evidenced in particular by the adoption of the European Commission’s 2010 revised Guidelines on Vertical Restraints, the European Court of Justice’s 2011 ruling in the Pierre Fabre case, the European Commission’s 2013 E-books commitments decision, and the recent announcement of a sector investigation into e-commerce by Competition Commissioner Margrethe Vestager.

Within this context, the practice that has attracted most attention in recent years is undoubtedly the use of Most Favored Nation clauses (“MFN clauses”), also called “parity clauses,” in agreements between online booking platforms and hotels. Pursuant to such clauses, hotels are obliged to offer to their online platform partner at least as favorable terms (price, room capacity, booking conditions, and services offered) as those offered to competing platforms and through other distribution channels, both on- and off-line, irrespective of the level of commission charged by the partner platform. Such clauses are widely used in identical terms by all three major online booking platforms in Europe (Booking, Expedia, and HRS).

In recent years, several national competition authorities have launched investigations into these practices. In 2013, the German Federal Cartel Office issued a decision finding that the MFN clauses contained in agreements concluded between HRS and hotels in Germany infringed article 101 TFEU and the corresponding German provisions. The FCO ordered HRS to cease using such clauses in its contracts, but no fine was imposed.

More recently, the French, Swedish, and Italian competition authorities addressed the issue in parallel procedures that led to the adoption of very similar commitment decisions. No infringement of EU or national competition provisions was found, but had to offer significant commitments to appease the national competition authorities’ competition concerns. The present article will focus on the decision recently adopted by the French competition authority, the Autorité de la Concurrence.