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HOTREC calls on Online Travel Agents to promptly abandon parity clauses from their hotel contracts
calls on Online Travel Agents to promptly abandon parity clauses from their hotel
(Brussels, 3rd December 2013) "Most
favoured nation clauses” (MFN), or clauses on rate, availability and product
parity, are widely used in the general terms and conditions of Online Travel
Agents (OTAs) and, being in contravention of EU laws, are rightly treated with
suspicion by more and more antitrust authorities in Europe. "OTAs must promptly agree to amend terms of
business to void existing MFN clauses across all agreements where such clauses
exist. Further, OTAs should forego future use of the clause in new agreements.
Failure to fully remove the effect and use of these clauses will force HOTREC,
among others, to call for legal action by national or European competition
restore entrepreneurial freedom, legal certainty and prevent further economic
damage,” pointed out Kent Nyström,
President of HOTREC.
regime of MFN-clauses hotels are deterred from offering any type of booking
incentive exclusively to their direct guests. Established OTAs abuse their
dominance to force hoteliers into either accepting the MFN-clauses or opting
out of using their services. If this cycle continues, customers will be denied
from the possibility of enjoying the full benefits of competition.
recent months several competition authorities across Europe have explored or investigated
MFN-clauses as used by OTAs in the hotel online booking sector, for instance in
Austria, France, Germany, Hungary, Norway, Sweden, Switzerland, and the United
Kingdom. Some of these proceedings seem to be at an advanced stage and publicly
available information strongly indicates that MFN-clauses as used by OTAs in
the hotel online booking sector are generally considered as being in violation
of national and EU competition law and are therefore illegal and void.
instance, in its second statement of objections against the leading OTA in
Germany "Hotel Reservation Service Robert Ragge GmbH” of 25th July
2013, the German Cartel Office has confirmed its previous competition concerns
in respect of the MFN-clause used by the OTAs. It found that MFN-clauses only
seem to be to the benefit of consumers at first sight. In reality, however,
they hinder competition for better offers between OTAs by virtually eliminating
competition for lower room prices between them. In addition, MFN-clauses make
the market entry of new suppliers offering innovative services considerably
more difficult as these new competitors are not able to offer hotel rooms at
better rates. In addition, the German Cartel Office found that MFN-clauses also
restrict competition between the hotels because hotels are not free to set
their prices independently and cannot respond flexibly to new competition
Commission of Commercial Practices has also issued a first opinion, stating
that MFN-clauses are void and unlawful since they imply an automatic alignment
with the most favourable conditions granted to competitors. On the basis of
this opinion, the French government sued Expedia in front of the commercial
are promptly abandoned from all contracts of OTAs, competition will be renewed
in this valuable market place, from which the customers will benefit at the
For the above same
reasons, HOTREC had already called upon the OTAs to abandon the use of
MFN-clauses relating to rates, conditions, and room availability in its "Benchmarks of Fair Practices in
Online-Distribution” of 27th April 2012, without any measurable effect.
"HOTREC is not willing to accept any longer that the entire hotel
industry in Europe can be deprived of their entrepreneurial freedom and suffer
economic damage, because of a likewise anti-competitive and unfair behaviour by
OTAs using MFN-clauses”, commented Markus Luthe, chairman of the HOTREC Task Force Digital Distribution and member of
the Executive Committee of HOTREC.
What is HOTREC?
HOTREC represents the hotel, restaurant and café industry at European
level. This industry includes around 1,8 million businesses, of which 99.5%
are small and medium sized enterprises (91% of them micro enterprises, i.e.
employing fewer than 10 people). These businesses make up some 60% of
industry value added. The hospitality industry provides more than 10 million
jobs in the EU alone. Together with the other tourism industries, the sector
is the 3rd largest industry in Europe.
HOTREC brings together 44 national associations representing the
sector in 27 different European countries.
For further information: www.hotrec.eu
PRESS CONTACT: Mr. Daniel
Makay, +32(0)2 513 63 23, email@example.com