Hotel sector c. Booking.com: 2-0 – Law & Technology

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In principle, a hotel using the Booking.com platform can bring proceedings before a court of the Member State in which the hotel is established to put an end to any abuse of a dominant position. Although the actions thus contested are implemented within the framework of a contractual relationship, the rule of special jurisdiction in tort or quasi-tort provided for by the Brussels I bis regulation applies to it.

The context

The relationship between hotels and the reservation platform has been complicated and paradoxical for a long time.

Booking rightly points out that it provides numerous services for the benefit of registered hotels:

  • SEO first of all. However, referencing is a profession that is beyond the reach of most hotels, which would otherwise be less well referenced. In addition, Booking allows great savings on referencing through the pooling effect, and puts all hotels on an equal footing.
  • Another service is the reservation itself. This requires an IT infrastructure that is not within the reach of all hotels, especially of modest size.
  • There is still indirect advertising in favor of hotels. Booking claims that 40% of the traffic received by a hotel’s site actually comes from Booking (the consumer makes his comparison on booking, chooses his hotel, but then goes live on the site of this one).
  • Finally, Booking claims to be the least bad solution to maintain a form of balance in the hotel sector where large groups devour small independent players.

On the hotel side, we also have arguments:

  • First, there is the cost of the commission. From 12 to 15% depending on the country and region, plus options (visibility pack, etc.), which can lead to a total cost of 20 to 25% of the price of the night. Difficult to assume when the profit margin is 20%: the hotel must make up for other things (restaurant, bar, spa, shops, etc.) but not all have this possibility.
  • Then there is the problem of economic dependence. Some establishments, especially in the mid-range, are run by people who are hospitality professionals but not marketing. When Booking came to find them a few years ago, they saw it as a costly, but easy solution. Over time, the proportion of reservations received via Booking has increased, to the point that these hotels are now in a situation of dependency. Booking was to be a supplement to fill the rooms in case of slack; it has become for them the main source of influx of customers, but under too difficult economic conditions. These hotels want to regain their independence.
  • There is still the very principle of free pricing which shocks several operators. They consider that as soon as they pay a commission to Booking, they have paid for the service that the company provides them. They therefore regain their pricing freedom.

The narrow parity clause was, until recently, emblematic of the issue of tariff freedom. This is a contractual commitment made by the hotel, not to sell rooms on its website at a price lower than the one it offers on the intermediation platform. The hotel may charge a lower price in other circumstances (for example a phone call or a guest who shows up unexpectedly), but it cannot, under this clause, lower the displayed price on its own website below what it advertises on Booking or Trivago.

Following an investigation by the European Commission competition services, this clause (and others) has disappeared. 1 – 0 in favor of the sector.

Facts

Would Booking have indirectly put in place an abusive system to control the hotel sector ever more? This is the question that arises behind the Wikingerhof affair with, beyond the sole question of Booking, an important procedural issue for all disputes involving abuse of a dominant position.

Wikingerhof GmbH & Co. KG, a company incorporated under German law operating a hotel in Germany, entered into a contract in 2009 with Booking.com BV, a company incorporated under Dutch law having its registered office in the Netherlands and operating a platform accommodation reservations. This was a standard contract provided by Booking.com and in which the following was stated in particular: “The hotel declares to have received a copy of version 0208 of the general conditions […] from Booking.com. These can be found online on the Booking.com website […]. The hotel confirms to have read the conditions, to have understood them and to agree to them. The conditions are an integral part of this contract […]. “. Subsequently, Booking.com modified its general conditions several times, which are accessible on the company’s extranet.

Wikingerhof challenged in writing the inclusion in the contract in question of a new version of the general conditions that Booking.com had brought to the attention of its contractual partners on June 25, 2015. It considered that it had not had no choice but to enter into this contract and be subject to the effect of subsequent modifications to the general conditions of Booking.com due to the latter’s dominant position in the market for intermediary services and accommodation reservation portals , even if some of Booking.com’s practices are unfair and therefore contrary to competition law.

Wikingerhof subsequently brought legal action before the Landgericht Kiel (Regional Court of Kiel, Germany) to have Booking.com banned.

  • to affix at the price indicated by Wikingerhof, without the latter’s consent, the words “more advantageous price” or “reduced price” on the accommodation reservation platform,
  • to deprive it of access to the contact data that its contractual partners provide on this platform and
  • make the positioning of the hotel that it operates, when research requests are made, depend on the granting of a commission exceeding 15%.

Who is competent?

The Landgericht Kiel concluded that it lacked territorial and international jurisdiction, which was confirmed on appeal by the Oberlandesgericht Schleswig (Higher Regional Court of Schleswig, Germany). According to the latter, in addition to the general jurisdiction of the German courts under Regulation no.o 1215/2012 was lacking due to the fact that Booking.com has its registered office in the Netherlands, nor the special jurisdiction for the place of performance of the contractual obligation, pursuant to Article 7, point 1, under a), of by-law no.o 1215/2012, nor that in respect of the place of the harmful event in tort or quasi-tort, under Article 7, point 2, of that regulation, was established in the present case.

Having brought an appeal before Wikingerhof, the Bundesgerichtshof (Federal Court of Justice, Germany), in turn, referred the matter to the Court for a preliminary ruling, in order to determine whether Article 7 (2) of Regulation 1215/2012 is applies to an action aimed at putting an end to certain acts implemented within the framework of the contractual relationship between the plaintiff and the defendant and based on an allegation of abuse of a dominant position committed by the latter, in violation of competition law.

Assessment of the Court

In response to that question, the Court observes that the applicability is of Article 7 (1) (a) of Regulation Noo 1215/2012 or Article 7, point 2, thereof depends, in particular, on the examination, by the court seised, of the specific conditions provided for by these provisions. Thus, when a claimant avails himself of one of those rules, it is necessary for the court seised to verify whether the claims of the claimant are, regardless of their qualification in national law, of a contractual nature or, on the contrary, of a tort nature. or quasi-tort, within the meaning of this regulation. In particular, in order to link a request formulated between contracting parties to “contractual matters” or to “tort matters”, within the meaning of Regulation No 1215/2012, the court seised must examine the “contractual” or “tort or tort” obligation. quasi-tort ”serving as its cause.

Thus, an action falls within the scope of a contract, within the meaning of Article 7 (1) (a) of Regulation Noo 1215/2012, if the interpretation of the contract binding the defendant to the plaintiff appears essential to establish the lawfulness or, on the contrary, unlawfulness of the behavior accused of the first by the second. On the other hand, when the plaintiff invokes, in his petition, the rules of tort or quasi-tort, namely the violation of an obligation imposed by law, and it does not appear essential to examine the content of the contract concluded with the defendant to assess the lawful or unlawful nature of the conduct alleged against the latter, the cause of the action falls under tort or quasi-tort, within the meaning of Article 7, point 2, of Regulation no.o 1215/2012.

In this case, Wikingerhof invokes, in its application, a violation of German competition law, which provides for a general ban on the abuse of a dominant position, independent of any contract or other voluntary commitment. Thus, the legal issue at the heart of the main proceedings is whether Booking.com has committed an abuse of a dominant position, within the meaning of that competition law. However, to determine the lawful or unlawful nature with regard to this right of the practices alleged against Booking.com, it is not essential to interpret the contract binding the parties to the main proceedings, such an interpretation being at most necessary in order to establish the materiality of those practices.

An issue that goes beyond litigation with Booking

The Court provides an answer that goes far beyond the question of Booking’s dominant position. It considers that, subject to verification by the referring court, the action, in so far as it is based on the legal obligation to refrain from any abuse of a dominant position, falls within the scope of tort or quasi-tort, within the meaning of Article 7, point 2, of Regulation No 1215/2012.

There is therefore a good chance that this judgment will be applied identically in other proceedings where the victim of the alleged abuse will want to bring before his own national courts.

More informations ?

The judgment and the Advocate General’s conclusions are available in the annex.

We want to give thanks to the writer of this write-up for this amazing material

Hotel sector c. Booking.com: 2-0 – Law & Technology

Hank Gilbert