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Bundeskartellamt continues to view HRS's best price clause critically

Date of issue: 25.07.2013

The Bundeskartellamt has confirmed its competition concerns about the best price clause used by the hotel booking portal HRS. After examining the statements of HRS and all other relevant market participants, the Bundeskartellamt has again issued a statement of objection to HRS for violating German and European competition law.

HRS uses so-called best price clauses in its contracts with the hotels featured on its booking portal. Accordingly, the hotels are obliged to always offer their lowest room price, maximum room capacity and most favourable booking and cancellation conditions available on the Internet also via the HRS booking portal. Since March 2012 the hotels are even prohibited from offering travellers better conditions if they book directly at the hotel's reception desk. Upon request by the Bundeskartellamt, HRS has undertaken to abstain from enforcing the best price clause for the course of the proceedings.

Andreas Mundt, President of the Bundeskartellamt: "These proceedings concern an essential issue for internet business via platforms. Clauses similar to those used by HRS can also be found at other platform operators in different sectors. Best price clauses are also used by HRS's main competitors. Often such clauses only seem to be to the benefit of consumers. In reality, they hinder competition for better offers between the portals by virtually eliminating competition for lower room prices between the hotel booking portals in Germany. In addition, such clauses make the market entry of new suppliers offering innovative services such as last minute offers via smartphone considerably more difficult as these new competitors are not able to offer hotel rooms at better rates. The competition between the hotels is also hindered because they are not free to set their prices independently and cannot respond flexibly to new competition developments. Ultimately, it's the consumers who lose out because neither the booking portals nor the hotels are able to make them better offers or offer them more favourable conditions, e.g. for cancellations."

The new statement of objections gives HRS the opportunity to review its previous position on this issue. The terms of contract between internet platforms and hotels have also become an issue for other competition authorities, both within and outside the European Union. This includes concerns about the anti-competitive effects of best price clauses used by hotel booking portals in their contracts with hotels in the respective countries. The Bundeskartellamt is liaising closely with its foreign colleagues in this matter.

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