Most Favored Nation Clauses: A French Perspective on the Booking.com Case

This article is part of a Chronicle. See more from this Chronicle

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 …

ACCESS TO THIS ARTICLE IS RESTRICTED TO SUBSCRIBERS

Please sign in or join us
to access premium content!