Case C‑264/23

Booking.com BV
and
Booking.com (Deutschland) GmbH

25hours Hotel Company Berlin GmbH and Others

(Request for a preliminary ruling from the Rechtbank Amsterdam)

Judgment of the Court (Second Chamber) of 19 September 2024

(Reference for a preliminary ruling – Competition – Article 101 TFEU – Agreements between undertakings – Contracts concluded between an online reservation platform and hoteliers – Price parity clauses – Ancillary restraint – Block exemption – Vertical agreements – Regulation (EU) No 330/2010 – Article 3(1) – Definition of the relevant market)

Questions referred for a preliminary ruling – Admissibility – Need for a preliminary ruling and relevance of the questions referred – Assessment by the national court – Presumption of relevance of the questions referred – Action for compensation of the damage caused by infringements of the rules on competition – Probative value which may be accorded by that national court to the final decisions taken in another Member State – Irrelevant

(Art. 267 TFEU; European Parliament and Council Directive 2014/104, Art. 9(2) and (3))

(see paragraphs 33-40)
Agreements, decisions and concerted practices – Adverse effect on competition – Ancillary restraint – Concept – Restriction necessary to the implementation of a main operation which is not anticompetitive – Objective and proportionate nature – Assessment of objectivity – Conditions distinct from those required in order to qualify for an exemption

(Art. 101(1) and (3) TFEU)

(see paragraphs 51-53, 55-58, 65, 66)
Agreements, decisions and concerted practices – Adverse effect on competition – Ancillary restraint – Concept – Restriction necessary to the implementation of a main operation which is not anticompetitive – Objective and proportionate nature – Assessment of proportionality

(Art. 101(1) and (3) TFEU)

(see paragraph 54)
Agreements, decisions and concerted practices – Adverse effect on competition – Ancillary restraint – Concept – Restriction necessary to the implementation of a main operation which is not anticompetitive – Objective and proportionate nature – Price parity clause in the contracts between online hotel reservation platforms and accommodation providers – Precluded

(Art. 101(1) TFEU)

(see paragraphs 59-64, 72-73, 75, operative part 1)
Agreements, decisions and concerted practices – Prohibition – Block exemption – Vertical agreements – Regulation No 330/2010 – Conditions – Relevant market – Delimitation – Criteria – Substitutability of the products or services on the supply side or the demand side – Intermediation services provided by a hotel reservation platform in the transactions concluded between providers of accommodation services and consumers – Concrete examination of the substitutability of those services – Relevant factors – Taking into account of the assessments of a national competition authority and of the national review courts – Verifications which are for the national court to carry out

(Art. 101(1) and (3) TFEU; Commission Regulation No 330/2010, Art. 3(1))

(see paragraphs 80, 82, 85-90, operative part 2)

Résumé

Ruling on a reference for a preliminary ruling from the Rechtbank Amsterdam (District Court, Amsterdam, Netherlands; ‘the referring court’), the Court of Justice provides new clarification on the application of the principle of the prohibition of agreements, decisions and concerted practices laid down in Article 101(1) TFEU to the price parity clauses used by Booking.com, like other hotel reservation platforms, in the contracts concluded with accommodation providers. In the case at hand, the Court holds that such clauses cannot be classified as ‘ancillary restrictions’ falling, as such, outside the scope of that provision, before providing indications on the criteria for defining the relevant product market for the purposes of the application of exemption Regulation No 330/2010. ( 1 )

Booking.com BV, a company incorporated under Netherlands law, connects accommodation establishments and customers via its online hotel reservation platform Booking.com in return for the payment of a commission by those establishments for each reservation made through that platform and not cancelled. Booking.com has been active on the German market since 2006, being supported by its German subsidiary Booking.com (Deutschland).

Until 2015, Booking.com included, in the general terms and conditions of the agreements concluded with accommodation providers, a ‘wide parity’ clause, pursuant to which those providers could not offer, on their own sales channels or on other channels operated by third parties – including competing platforms – rooms at a price lower than that offered on the Booking.com website.

In 2015, Booking.com undertook, in consultation with the French, Italian and Swedish competition authorities, to remove that wide parity clause in order to replace it with a ‘narrow parity’ clause which limited the prohibition on accommodation providers from offering their rooms at better prices than those offered on the Booking.com website to offers made through their own sales channels.

By decision of 22 December 2015, taken after consulting the European Commission, the Bundeskartellamt (Federal Cartel Office, Germany) nevertheless found that such a narrow parity clause was also contrary to the prohibition of agreements, decisions and concerted practices in EU and German law and consequently ordered Booking.com to cease using it. By a decision of 18 May 2021, the Bundesgerichtshof (Federal Court of Justice, Germany), hearing an appeal brought by the Federal Cartel Office, annulled the decision of the Oberlandesgericht Düsseldorf (Higher Regional Court, Düsseldorf, Germany) of 4 June 2019 which had upheld in part the appeal brought by Booking.com against the decision of that authority. It held, without having asked the Court, that the narrow parity clause significantly restricted competition on the market for online hotel reservation platforms and on the market for hotel accommodation. Such a clause could not be classified as an ‘ancillary restraint’, since it had not been established that, in its absence, Booking.com’s profitability would be compromised. Nor could that clause benefit from an exemption under Regulation No 330/2010 or from any other exemption from the prohibition of agreements, decisions and concerted practices in EU and German law.

It is in that context that Booking.com brought an action before the referring court seeking a declaration, inter alia, that the parity clauses that it employs did not infringe Article 101 TFEU. Sixty-three German hotel establishments then, by way of counterclaim, requested that court to declare that Booking.com had infringed Article 101 TFEU and to order it to pay damages for infringement of Article 101 TFEU.

The referring court is uncertain whether the price parity clauses applied by online hotel reservation platforms must be regarded as ancillary restraints within the meaning of Article 101(1) TFEU. In the event that that classification should be rejected, the referring court considers that the question then arises as to whether those clauses may be exempted under Regulation No 330/2010. That leads it to ask the Court how to define the relevant product market in the case at hand for the purposes of the application of that regulation.

Findings of the Court

As a first step, the Court provides the requested clarification on the scope of the prohibition of agreements, decisions and concerted practices laid down in Article 101(1) TFEU. In that regard, as is apparent from settled case-law, if a given operation or activity is not covered by the prohibition rule laid down in Article 101(1) TFEU owing to its neutrality or positive effect in terms of competition, a restriction of the commercial autonomy of one or more of the participants in that operation, which may appear on the face of it to be anticompetitive, is not covered by that prohibition rule either if that restriction is ancillary to that operation.

In order for a restriction to be classified as ‘ancillary’, it is necessary to establish, first, whether the implementation of the main operation would be impossible in the absence of the restriction in question, it being specified that the fact that that operation is simply more difficult to implement or less profitable without the restriction concerned does not make the restriction of ‘objective necessity’ to the implementation of the main operation. Second, the restriction at issue must be proportionate to the objectives underlying the main operation.

In that context, it is important to specify that a distinction must be made between the concept of ‘ancillary restraints’ as it is examined in the context of Article 101(1) TFEU and the exemption based on Article 101(3) TFEU. Unlike the latter, the objective necessity of a restriction relating to the main operation does not require balancing the procompetitive and anticompetitive effects of an agreement, but determining whether, in the particular context of that operation, the restriction in question is indispensable to the implementation of that operation. While it is in principle for the referring court alone, taking into account all the facts that are put before it, to determine whether the conditions for establishing the existence of an ancillary restraint have been met, the Court is nevertheless entitled to provide the referring court with indications to guide it in its examination of those conditions.

In the case at hand, the Court notes that, although the provision of online hotel reservation services has had a neutral, or even positive, effect on competition, it has not been established that parity clauses, both wide and narrow, are objectively necessary for the implementation of that main operation and proportionate to the objective pursued by it. Although wide parity clauses clearly produce appreciable restrictive effects, narrow parity clauses, albeit less restrictive, cannot be regarded as objectively necessary to ensure the economic viability of the hotel reservation platform, either.

The fact, assuming it were established, that those clauses tend to combat possible free-riding phenomena and are indispensable in guaranteeing efficiency gains or in ensuring the commercial success of the said services does not make it possible to classify the said clauses as ‘ancillary restraints’.

In that context, the Court recalls that the examination of the objective necessity of a restriction may, in particular, be based on a counterfactual analysis making it possible to examine how the services would have functioned in the absence of the parity clause. It notes in that regard that Booking.com’s business has not been compromised in the Member States where those clauses have been prohibited.

In the light of the foregoing considerations, the Court is called upon, as a second step, to clarify the exemption conditions of certain agreements, under Article 101(3) TFEU, referred to in Regulation No 330/2010. The referring court started from the premiss that price parity clauses form part of a ‘vertical agreement’ between Booking.com and the various accommodation providers. Those agreements are exempted where they fulfil certain conditions, among which is the capping at 30% of the market share held by the operator concerned.

In that regard, the Court recalls that, in order to define the relevant product market, it is necessary to ascertain whether the products or services forming part of the same market are interchangeable or substitutable by consumers.

In the case at hand, it is necessary to examine whether other types of intermediation services and other sales channels are substitutable for the services provided by Booking.com, both from the point of view of accommodation providers and from that of end customers, even if those channels have different characteristics and do not offer the same search and comparison functionalities. The Court emphasises that the definition of the relevant market depends on an in-depth factual examination which only the referring court can carry out, especially where, as in the present case, little information has been provided to the Court.

To that end, it is for the referring court to take account of all the information that has been submitted to it. In that context, the findings of the Federal Cartel Office and the review bodies in Germany on the definition of the relevant product market are among the particularly relevant contextual factors.

It is, however, for the referring court to determine whether such a market definition, which takes account of the particular characteristics of the ‘contract services’ offered by hotel reservation platforms both from the point of view of accommodation providers and from the point of view of end customers, is vitiated by any error of analysis or is based on erroneous findings.

( 1 ) Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices (OJ 2010 L 102, p. 1).