3 months ago
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Spain’s competition authority, the CNMC, has found that online travel agency Booking.com abused a dominant market position over the past five years. It fined the company €413.24 million (or around $447 million at current exchange rates) on Tuesday.
The CNMC opened an investigation of Booking.com back in October 2022, following complaints by the Spanish Association of Hotel Managers and the Regional Hotel Association of Madrid. The watchdog’s probe confirmed that Booking imposed unfair terms and conditions on hotels that the authority said made it difficult for rival travel agencies to compete.
Booking.com held a share of between 70% and 90% of the market in Spain for provision of online booking intermediation services to hotels by online travel agencies over the period in question.
“The company has committed two abuses of its dominant position since at least January 1, 2019 until today by imposing various unfair commercial conditions on hotels located in Spain that use its booking intermediation services and restricting competition from other online travel agencies… that offer the same services,” the CNMC wrote in a press release [in Spanish; this is a machine translation].
The authority concluded that Booking imposed an unfair price clause on hotels using its platform that prevented them from offering their rooms on their own websites for less than the price offered on Booking.com, even as the platform reserved the right to unilaterally reduce the price hotels offer through its website or application.
The CNMC also found fault with issues related to clauses pertaining to the company’s general terms, stating that only an English version of the terms had legal value whereas both the law applicable to the terms, and the competent courts, are of the Netherlands, where Booking is headquartered. This made it more expensive than it should be for Spanish entities to take Booking to court in the event of a dispute.
Additionally, the investigation findings call out a lack of transparency around the value Booking provided hotels via a series of subscription products that allow hotels to improve their position in the platform’s default rankings in exchange for paying higher commission fees or offering some of their rooms at discounted rates.
The CNMC said Booking was able to abuse its dominant position by restricting competition from other online travel agencies by using the total number of reservations for a hotel through its platform as a ranking criterion in the default search results lists, thereby encouraging hotels to concentrate their online bookings on Booking.com.
The authority’s findings also highlight the use of a performance requirement by Booking that it used as a criterion for hotels accessing and remaining in two of the aforementioned subscription programs — but which it found to be based “primarily on the profitability of each hotel for Booking.com.”
“This encourages hotels that want to access or remain in the programs to follow a pricing and availability policy that leads them to concentrate their sales on the platform, to the detriment of other competing agencies,” the CNMC added.
The sanction imposed by the Spanish authority breaks down into two penalties of €206.62M apiece for each of the abuses of a dominant position. The first is the unfair T&Cs imposed on hotels in Spain, and the second being the restriction of competition from other online travel agencies.
The authority has also imposed behavioral obligations on Booking, which require it to stop the infringing conduct and ensure it does not engage in any other similar conduct that could product an equivalent effect in the future.
Booking.com has been contacted for a response to the CNMC’s sanction. The company may appeal the sanction before the National Court but must do so within two months.
Beyond Spain, the European travel giant is facing tighter regulation across the EU in the coming months, following its designation as a gatekeeper under the bloc’s Digital Markets Act back in May. It will be expected to be compliant with that regime by mid November with the risk of penalties for non-compliance that can reach up to 10% of global annual turnover (or 20% for repeat offenses).
