On 31 January 2014, the Office of Fair Trading ("OFT") closed its hotel online booking investigation with no finding of infringement. The investigation concerned restrictions on discounting by online travel agents ("OTAs"). Specifically, the OFT had expressed concerns about clauses under which Expedia and Booking.com had agreed not to offer rooms at rates lower than the rates set day-by-day by hotel companies, namely ILPL and IHG in the case of Booking.com and only ILPL in the case of Expedia (see VBB on Competition Law, Volume 2013, No. 8, available at www.vbb.com).

The OFT's decision of 31 January 2014 confirmed that restrictions on discounting had as their object the limitation of price competition between OTAs and between OTAs and hotels' own online platforms and were, furthermore, likely to increase barriers to entry for new OTAs. The investigation was closed after the parties submitted commitments according to which in summary (1) Expedia and Booking.com will be free subject to certain conditions to offer reductions off the room rates set by the hotels to members of so-called "closed groups" consisting mainly of consumers have who actively opted in to become a member of a group; and (2) the hotels will be able to offer discounts off their room rates to members of closed groups without triggering the consequences of price parity/MFN clauses agreed with OTAs.

The case focused on restrictions on discounting by OTAs. In this context, it will be recalled that the European Court of Justice considered in the Flemish Travel Agents judgment of 1987 that restrictions on the freedom of certain travel agents to share their commission with customers infringed Article 101 despite the fact that the travel agents were agents and not resellers.

In addition, although the OFT stated that it did not investigate whether the price parity/MFN clauses agreed between the OTAs and the hotel companies may give rise to a breach of the Chapter I prohibition and/or Article 101 TFEU, the commitments also address such clauses. Under the price parity/MFN clauses in question, the hotels agreed to provide OTAs with rooms at rates no higher than the lowest booking rate displayed by any other online distributor. Under the commitments, subject to certain conditions, Expedia and Booking.com agreed not to enter into any new, or enforce any existing, price parity/MFN clauses in respect of reductions offered by hotels to their closed group members who have made at least one prior booking directly with the hotel. More specifically, this commitment would apply where the hotel does not publicize information regarding the specific level or extent of reductions for any hotel room, or any other information which would allow a discounted retail rate to non-members to be calculated, including on the hotel's own public website and via price comparison websites and meta-search sites. The possible effects of price parity/MFN clauses is an issue currently attracting the attention of various competition authorities in the European Union and can be expected to generate more case law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.