In 2010, the CMA’s predecessor, the OFT, launched an investigation into alleged pricing restrictions in the online hotel booking sector. The investigation looked into Booking.com and Expedia’s use of rate parity, or most favoured nation (‘MFN’), clauses, which restricted hotels from offering different prices, terms and availability through other competing online travel agents.
Whilst the investigation did not specifically relate to these clauses, their prevalence was noted. At the time, concurrent investigations were under way throughout Europe, with a focus on MFN clauses. By April 2015, French, Italian and Swedish competition authorities had formally accepted binding commitments from several online travel agencies to avoid the clauses.
Following their commitments to the European authorities, Booking.com and Expedia removed the MFN clauses from their commercial contracts in the UK. As a result, the CMA closed its investigation on the grounds of administrative priorities. It has nonetheless maintained an on-going monitoring project across the sector and raised awareness amongst the online travel sector of the commitments.
In August 2020, Booking.com and Expedia voluntarily agreed to extend their formal commitments not to impose ‘wide’ parity clauses in the UK, which had expired on 1 July 2020. The CMA has also stated that it will continue to monitor market developments.
For more information please contact Peter Willis.