(Previous installments here)
The German competition authority also
noted that there are alternative ways to achieve some of the benefits HRS
ascribes to the retail MFN clause which do not carry the same serious anti-competitive
consequences, such as, by way of example, monthly listing fees, or cookie-based
marketing fees, paid directly by the hotels to the OTAs. These alternative
business models would ensure HRS a direct financial reward for the services it
provides to hotels, irrespective of the actual sales it generates. Another
possibility would be combine a fixed rate, such as a listing fee, with a
variable look-to-book conversion rate.
At any rate, the Bundeskartellamt expects that, once the conditions
for healthy competition in the industry are redressed, business models will develop
that are attuned to the modified market conditions and demands. Interestingly,
the “natural experiment” conducted since April 2012, when HRS pledged not to
enforce the retail MFN clause in its contracts with hotels, would seem to demonstrate
that OTAs are not doomed to develop into financially unsustainable “hotel
search engines.” In fact, despite the demise of the retail MFN provision, HRS
was able to safeguard its position as a leading OTA in the German market. However,
this can also depend on the consumers’ tendency not to switch between OTAs (“singlehoming”),
an attitude reinforced by the best price guarantee still dominant in the hotel
industry.
Possibly, given the German competition authority’s focus on the
retail MFN clause, it was not deemed
necessary to assess whether the vertical price fixing provision contained in
the “agency” agreement was by itself anticompetitive, or whether it could be justified
due to the efficiency benefits ascribed to it. While European competition law generally permits
a hotel to harmonize its distribution networks to avoid “free-riding” and to stimulate
interbrand competition, even if this might tend to eliminate intrabrand price competition,
in the on-line travel case investigated by the German competition authority there is clear evidence that the retail price MFN was actually requested by HRS, thus dictating to the hotels an essential element of their pricing policy.
(To be continued)
