An umbrella organisation representing hundreds of Irish hotels is joining the industry across Europe in an “unprecedented” legal action against one of the world’s largest accommodation platforms over what they say were inflated rate of commission imposed for two decades.
The hotels are seeking “substantial financial compensation” from booking.com following a judgment from the European Court of Justice (ECJ) last September which found that the platform’s so-called parity clauses breached European Union (EU) competition law.
Booking.com has said it is unaware of any pending legal action and suggested the case appeared to be based on “incorrect and misleading” information.
The IHF said the legal advice it and other hotel groups had received was “contrary to Booking.com’s assertion, which does not align with the actual ECJ findings”.
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The contested clauses in the contracts that hotels had to sign if they wanted to feature on the site effectively prevented them from offering lower prices or better availability through other channels, the legal action will say.
And it will argue that the strict conditions placed on hotels and their customers put them at a competitive disadvantage by suppressing price competition between Booking.com and other online platforms.
The hotels will also argue that it resulted in them being charged inflated levels of commission with the clauses also restricting them from offering better prices or availability on their own websites, limiting direct sales and autonomy.
Under the general principles of European competition law, hotels in Ireland and across Europe are now entitled to claim compensation from Booking.com for the financial losses suffered.
The collective legal action is being supported by the European hospitality association and over 25 national hotel associations across Europe including the Irish Hotels Federation (IHF).
It is being brought before the Amsterdam district court in the Netherlands, where Booking.com is headquartered. More than 900 Irish hotels and guest houses are eligible to join the action that covers a period from 2004 to 2024.
Affected hotels may be eligible to recover a significant portion of commissions paid to Booking.com at any time over those 20 years plus interest, the IHF has said.
The group’s chief executive Paul Gallagher described it as “an unprecedented legal action” and said the booking.com parity clauses had been “a major issue for Irish hotels going back 20 years, resulting in significant financial harm due to the inflated levels of commissions charged. We see this as an important opportunity to send a strong message to online booking platforms that unfair business practices will not go unchallenged.”
The IHF said it was in direct communication with all affected hotels and guest houses in Ireland in relation to the next steps for joining the collective legal action against Booking.com.
It said the case was being led by a “team of highly experienced and recognised competition lawyers, litigators and competition economists, who have already successfully achieved the ECJ’s judgment last September.
In addition to the Irish Hotels Federation, the action is supported by national hotel associations from Austria, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Switzerland.
A spokeswoman for booking.com said the ECJ judgment “relates specifically to questions asked by the Amsterdam district court in relation to litigation between Booking.com and some German hotels disputing the legality of price parity clauses in Germany between 2006 and 2016.
“The court did not conclude that Booking.com’s German parity price clauses were anticompetitive or had an effect on competition,” she said. “The Amsterdam court will now need to make a decision specifically on German parity clauses only.”
