By Sam Schechner
PARIS--Online travel agent Booking.com will loosen controversial
pricing and availability contracts with hotels in several European
countries, settling allegations that the U.S. firm has been
stifling competition for hotel reservations.
Antitrust regulators in France, Italy and Sweden said Tuesday
that they have accepted a package of concessions from Booking.com,
a unit of U.S.-based Priceline Group Inc., to loosen contracts it
holds with hotels to be listed on its popular online-hotel booking
platform.
The deal includes several new concessions from Booking.com over
its initial settlement proposal late last year, including the
freedom for hotels to allot fewer rooms to Booking.com than to
other platforms, and to offer cheaper rooms directly to consumers
via offline channels, such as by phone. The settlement, which goes
into effect on July 1, is backed by possible noncompliance fines of
up to 5% of the company's global revenue.
Tuesday's Booking.com deal is the latest effort by European
antitrust regulators to use the threat of heavy fines to rein in a
new cadre of Internet firms--many from the U.S.--that have become
powerful middlemen in other businesses, ranging from hotels to
online advertising. The European Union last week filed formal
charges against Google Inc. for abusing an alleged dominant
position in online search, after several failed attempts at a
settlement.
While Tuesday's settlement applies only in France, Italy and
Spain, it was coordinated with the EU, and the French authority
said it hopes that the deal will be adopted in other European
countries where the company is being probed, as well as to other
competitors in the space such as Expedia Inc.
"We aren't going to stop here," said Bruno Lasserre, head of
France's competition authority. "We are imposing a test model that
can be replicated elsewhere."
Priceline Group said it too hopes that the deal can serve as a
template in Europe for competitors. "This is a milestone for how we
approach the market everywhere in the world," said Darren Huston,
chief executive officer of Priceline Group. "It will set the
tone."
Expedia said Tuesday that it is in "constructive discussions"
with antitrust regulators in France, Italy and Sweden and "hopes to
achieve a resolution in the near future on terms which meet all
parties' objectives."
The settlement follows years of wrangling between hotels and
Booking.com over so-called parity clauses in their contracts with
websites such as Booking.com. Hoteliers argue that the clauses
strip them of their flexibility in their pricing strategies, by
obliging hotels to offer Booking.com and other websites the same
room price they make them available elsewhere on the web.
Hotels in Europe pay online travel agents between 10% and 30%
commission on a room reserved via one of the sites, an amount they
have complained is too high, given the rising number of rooms that
are reserved via such portals.
In Booking.com's initial settlement late last year, the company
proposed softening the price-parity clause in its contracts to
allow hotels to offer rooms at cheaper rates to other online travel
agents. But in a comment period after the proposals were disclosed
last year, hotels chafed at other restrictions that remained,
leaving them unable to offer the rooms more cheaply themselves or
to restrict the number of rooms they gave to Booking.com.
Under Tuesday's settlement, which was hammered out in recent
months with input from the hotels, the French competition authority
said, hoteliers have won most of what they were looking for. But
they still will be unable to advertise lower prices than
Booking.com on their own websites or in their mobile applications;
to do so they must use individual mailings, phone calls or
in-person reservations.
The French competition authority said that the restriction is
justified because hotels benefit from advertising that companies
such as Booking.com purchases online, allowing even tiny hotels to
be visible on the Internet.
Write to Sam Schechner at sam.schechner@wsj.com
Access Investor Kit for Expedia, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US30212P3038
Access Investor Kit for Google, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US38259P5089
Access Investor Kit for Google, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US38259P7069
Access Investor Kit for The Priceline Group, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US7415034039
Subscribe to WSJ: http://online.wsj.com?mod=djnwires