Update | The Italian Competiton Authority (“AGCM”) has initiated an inquiry against Booking for abuse of dominant po...
On March 22, 2024, the Italian Competition Authority (“AGCM” or “Authority“) resolved to initiate an investigation against Booking.com B.V. and Booking.com International B.V. (collectively, “Booking“) to ascertain a possible violation of Article 102 of the Treaty on the Functioning of the European Union (TFEU), which sanctions abusive conduct by dominant market players.
The proceedings stem from notifications submitted to the AGCM by Federalberghi – Federation of Italian Hoteliers and Tourism Associations and AICA – Associazione Italiana Confindustria Alberghi (an organization that, belonging to the broader Confindustria network, is dedicated to safeguarding the interests of businesses in the hotel sector) (the “Complainants“) in March 2023.
The investigation focuses on Booking’s program aimed at providing hotels participating in the Preferred Partner Program (“PPP“) (and its extension Preferred Plus – “PPP+“) with benefits in terms of visibility of their offerings in search results, in exchange for higher commissions and the commitment to offer “competitive” prices on booking.com, i.e.a, not higher than those offered by the lodging establishments on their own website or on the platforms of other online travel agencies (OTAs). It is noteworthy that as compensation for joining these programs, Booking requires an increase in the commission paid by the establishment, amounting to 18% for PPP (a three percentage point increase over the base commission) and 23% for PPP+.
The second investigated conduct concerns the commercial policy whereby when Booking detects, through thorough and sophisticated monitoring, that a hotel offers better prices on other online sites, Booking reserves the right to apply a discount (the so-called Booking Sponsored Benefit – “BSB”) without the consent of the establishments, to align booking.com’s offer with the best available online.
The aforementioned company policies could constitute a violation of antitrust laws, as the AGCM believes that Booking holds a dominant position in the OTA market for hotels and similar accommodations, considering that, in Italy alone, about 70% of hotel room bookings through OTAs occur on this platform.
The abusive strategy described above could potentially harm: i) competing OTAs; ii) lodging establishments and thus ultimately iii) end consumers.
Regarding competing OTAs, the contested conduct could have the effect of eliminating them from the market and, in any case, discouraging them from reducing the commissions charged to lodging establishments: hotels, in fact, could not reward them by offering lower prices due to lower commission requests, because otherwise, they would risk losing the visibility advantages on the Booking platform derived from participating in the PPP and PPP+ programs. At the same time, even if lodging establishments applied lower prices on other OTA sites, Booking would restore parity by intervening with the BSB.
As for lodging establishments, the investigated conducts could limit the autonomy of hoteliers in defining their pricing strategy, reproducing effects similar to those resulting from the application of so-called parity clauses, prohibited by competition law. In particular, according to the Authority, lodging establishments participating in the Preferred Programs may have been induced to increase the final price of their services on Booking to prevent erosion of their profit margins by Booking’s commissions and to recover the higher cost of the commissions imposed on them; this would also result in price increases on all other online sales channels avoid exclusion from the PPP (and consequently PPP+).
The Authority also emphasizes that the application of the BSB may not necessarily guarantee a net benefit to consumers. They will likely end up paying a higher price than they would find on other sites in the absence of the BSB, as lodging establishments, knowing that Booking can intervene on prices to match offers proposed on other online channels, will be discouraged from offering significant discounts on their own website or on other OTAs.
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Public or private stakeholders, as well as consumer and category representative associations, who may suffer direct, immediate, and current prejudice from the infringements subject to the investigation or the measures adopted as a result thereof, may request to be admitted to the investigative proceedings by April 24, 2024.
The AGCM has set May 31, 2025, as the deadline for the conclusion of the proceedings.
