The Competition Commission considers the contractual clause to be a violation of antitrust law. The platforms had required the hotels not to offer lower prices or a larger number of rooms on any other distribution channel. This can be problematic for the hotels: If they want to be present on the booking platforms, they have to charge the same prices on other distribution channels - even if lower commissions are charged there. Moreover, once the hoteliers have set their room rates, they cannot lower them at short notice or in isolated cases. They would then also have to adjust all other prices downwards. The world's largest agency for online bookings, Booking.com, headquartered in Amsterdam, and Expedia, based in the USA, have meanwhile adapted their contractual clauses. The contractual condition now banned by the Competition Commission is no longer to be found in their contracts, but less restrictive provisions are.
HRS must adapt contracts
The Competition Commission cannot yet conclusively assess whether these new provisions are permissible under antitrust law. There is still too little experience, the authority writes. It reserves the right to observe developments on the market and to intervene again if necessary. Cologne-based HRS (Hotel Reservation Service), on the other hand, still has the now inadmissible contractual clause in its contracts. This must now be amended, writes the Competition Commission. HRS can appeal against the Comco's decision. However, the three booking platforms will not be fined. Their conduct does not fall under the category of directly sanctionable conduct, writes the Competition Commission. The suspicion that the companies had abused a dominant market position had not been substantiated. The Competition Commission's decision means that hoteliers can now offer cheaper room rates than Booking and Expedia if they receive an offline inquiry by post, for example, as explained by Olivier Schaller, Deputy Director of Competition Commission, when asked. On their own homepages, however, hoteliers cannot offer cheaper prices than Booking and Expedia.
Hotelleriesuisse dissatisfied
The industry association Hotelleriesuisse is not satisfied with this. In a press release, Hotelleriesuisse writes that the Weko decision means that, at first glance, hoteliers have more freedom because they no longer have to adhere absolutely to the guarantees for the same low prices for everyone. "However, they are still unable to offer their guests direct booking benefits on their own websites and are therefore restricted in their entrepreneurial freedom. The market power of the booking platforms has thus not been broken, but even strengthened," writes Hotelleriesuisse. Such a Weko decision would therefore not benefit Swiss hoteliers. The majority of hoteliers grant Booking the lowest price, as this booking platform receives the most overnight stays.
Booking dominates the Swiss market
Booking dominates the market in Switzerland with a share of over 70 percent of all online bookings, writes Hotelleriesuisse. The online booking platforms charge a commission for their activities such as advertising, booking, etc.. In Switzerland, this amounts to between 12 and 15 percent. "If you want to be very visible in the top places, it can be as high as 30 percent," writes the industry association. According to a study by Robert Schegg from the University of Applied Sciences for Tourism in Sierre VS, the booking platforms probably accounted for 25% of total bookings in 2014. They probably generated over 1 billion francs in revenue in 2014, while Swiss hotels had to pay between 90 and 130 million francs in commission payments, according to estimates. (SDA)
