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
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
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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