CNMC fines Booking.com nearly USD 450 million for exploiting its dominant market position over the last 5 years

Spain’s competitors watchdog authority, the CNMC, has discovered that on-line journey company Booking.com abused a dominant market position over the previous 5 years. It fined the firm Euros413.24 million (or round USD 447 million at present trade charges) for unfair phrases and proscribing rivals.

The practices have affected motels positioned in Spain and different on-line journey businesses that compete with the platform. Its clauses symbolize an unfair imbalance in the industrial relationship with motels positioned in Spain. By higher positioning motels with the most bookings on Booking.com, it has prevented different on-line businesses from coming into the market or increasing.

The CNMC opened an investigation of Booking.com again 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 phrases and circumstances on motels that the authority mentioned made it tough for rival journey businesses to compete.

Booking.com held a share of between 70% and 90% of the market in Spain for provision of on-line reserving intermediation providers to motels by on-line journey businesses over the interval in query.

“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 launch. Further the press launch states as beneath:

Abuse of exploitative dominant position

By imposing various unfair buying and selling circumstances on motels positioned in Spain, particularly:

• A worth clause that forestalls motels from providing their rooms on their very own web sites for lower than the worth provided on Booking.com (4), whereas Booking.com reserves the proper to unilaterally scale back the worth that motels supply by the Booking web site or utility.
• Various clauses whereby (i) solely the English model of the Booking.com General Terms and Conditions (GDT) has authorized worth, (ii) the regulation relevant to the GDT is that of the Netherlands and (iii) the competent courts are these of Amsterdam in the occasion of a dispute between the events.
• Lack of transparency in info about the influence and profitability of subscribing to the Preferred, Preferred Plus and Genius packages. These packages permit motels that subscribe to them to enhance their position in Booking.com’s default outcomes rating, in trade for the next fee or by providing reductions on the best-selling or most cost-effective room that the resort has on Booking.com.

Abuse of unique dominant position

By proscribing the competitors that different competing on-line journey businesses can train by the following formulation:

• Using the whole variety of reservations for a resort by Booking.com as a rating criterion in Booking.com’s default search outcomes checklist. This encourages motels to pay attention their on-line bookings solely by Booking.com, stopping rivals from coming into or increasing into the market.
• The use of a efficiency requirement , as a criterion for accessing and remaining in the Preferred and Preferred Plus packages, based mostly totally on the profitability of every resort for Booking.com. This encourages motels that need to entry or stay in the packages to observe a pricing and availability coverage that leads them to pay attention their gross sales on the platform, to the detriment of different competing businesses.

Effects of behaviors

Unfair industrial circumstances forestall motels from providing decrease room costs on their very own web sites, whereas Booking.com reserves the proper to decrease the room worth that the resort publishes on Booking.com. In the occasion of a dispute over the General Contractual Terms (GDT), they can’t resort to Spanish courts and should use Dutch regulation, which generates unfair litigation prices.

The lack of transparency prevents them from making knowledgeable selections about whether or not or to not subscribe to the Preferente, Preferente Plus and Genius packages, that are crucial for motels positioned in Spain.

The full use of resort reservations on Booking as a rating criterion in Booking.com’s default rating of outcomes, and the requirement of efficiency (the profitability of every resort for Booking) to entry or stay in Preferente and Preferente Plus, prohibit competitors from different on-line journey businesses and lead to motels not having the ability to entry higher industrial circumstances in the provision of on-line reserving intermediation providers.

Sanctions and obligations 

The CNMC imposes two fines on Booking.com of 206,620,000 euros for every of the single and steady infringements of abuse of dominant position: (i) the imposition of a collection of unfair industrial circumstances to motels positioned in Spain and (ii) the restriction of competitors from different on-line journey businesses when providing on-line reserving intermediation providers to motels positioned in Spain, respectively. The whole positive is 413,240,000 euros.

It additionally imposes a number of behavioural obligations on the applicant to make sure that neither the conduct that gave rise to the infringements, nor every other conduct which will produce an equal impact, continues in the future.

An administrative attraction could also be lodged straight in opposition to this choice earlier than the National Court inside two months from the day following its notification

Beyond Spain, the European journey large is going through tighter regulation throughout the EU in the coming months, following its designation as a gatekeeper below the bloc’s Digital Markets Act again in May. It will likely be anticipated to be compliant with that regime by mid November with the threat of penalties for non-compliance that may attain as much as 10% of world annual turnover (or 20% for repeat offenses).

EXPERT OPINION