The Federal Cartel Office (FCO) [Bundeskartellamt, BKO] has recently admonished HRS Hotel Reservation Service Robert Ragge GmbH about its most-favoured status clauses in hotel contracts. The Bonn cartel monitors deem the clauses a contravention of the German Act against Restraints of Competition [Gesetz gegen Wettbewerbsbschränkungen, GWB]. This is not without controversy.
HRS's standard contract prohibits hotels from offering better conditions on the Internet via other providers. This applies to prices, room availability and booking and cancellation conditions. As of March of this year, according to the Cartel Office, HRS intends to tighten the most-favoured status clause to such an extent that hotels will also not be allowed to offer more favourable offers than HRS at their reception desks. In the past, HRS blocked hotels which did not abide by its most-favoured status clause from any further bookings through HRS. The use of most-favoured status clause is deemed a restraint of competition in violation of Sec. 1 GWB and an inequitable hindrance by a market-dominating service provider.
How most-favoured status clauses are to be classed under antitrust law is disputed. Pursuant to Sec. 1 GWB, agreements and concerted conduct are prohibited if they serve to or create a hindrance, restriction or falsification of competition. Most-favoured status clauses to the detriment of suppliers, however, merely oblige the suppliers not to make third parties a better offer than that made to the contractual partner. The guidelines of the European Commission only make express reference to most-favoured status clauses which are imposed upon dealers to the benefit of their own customers. Clauses to the detriment of suppliers, in contrast, are not dealt with.
However, the most-favoured status clause used by HRS could have a restrictive competitive effect insofar as it deprives the hotels under contract of the possibility of offering the conditions agreed with HRS at short notice through offers on its own website or from making more favourable offers to spontaneous customers at the reception desk. The prospects of success of new competitors wishing to advance on the market for the agency of hotel rooms via the Internet are substantially restricted through the very fact that the hotels may not offer them more favourable conditions than those they offer HRS. However: even though HRS describes itself as the market leader for the agency of hotel rooms on the Internet, it has by no means been established to date whether or not the enterprise holds a dominating market share.
Following the Federal Cartel Office's admonishment, HRS initially has the opportunity to comment on the accusations. A decision of the Federal Cartel Office is by no means prejudiced by such warning. HRS could then have a possible FCO decision prohibiting the most-favoured status clause reviewed by the Higher Regional Court [Oberlandesgericht, OLG] of Düsseldorf. For the moment, the Federal Cartel Office's warning does not prevent HRS from using the most-favoured status clause.
In October 2011 HRS had acquired the majority holding in the competitor hotel.de and therewith took over the largest competitor on the German market. The merger was not subject to merger control, however, since HRS and hotel.de do not even collectively exceed the turnover threshold of EUR 500 million per year. Now, however, it would seem that the Office has indeed found a reason to take action against HRS.
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