Parity Clauses and Competition Law in Digital Marketplaces: The Case of Online Hotel Booking

Abstract

Recent case law concerning intermediation activity in digital markets shows that one of the key concerns of competition authorities is the use by online platforms of a type of agreement generally traced to the category of Most Favoured Nation clause (MFN), typically included in B2B long-term contracts, where the supplier undertakes to guarantee the best price conditions to the intermediary concerned as compared with any other dealer. The competitive assessment of such clauses (also known as parity clauses) is controversial in both traditional and digital markets. At first sight, they appear to offer potential benefits to consumers, at least in terms of price transparency and reduction of transaction costs; however, they also give rise to competition concerns, as they may serve to acquire or strengthen monopoly pricing. Their recurrence in the digital environment has revitalized an ongoing debate on the likely effects of these clauses on competition. The article first analyzes the business models adopted by intermediaries in e-commerce and the concerns that have arisen under competition law, with particular regard to the increasing use of some forms of MFN clauses. The analysis is conducted in the light of several cases in the field of online hotel booking brought before national competition authorities (NCAs) for alleged violation of competition rules. The article then questions the theories of harm and the main critical issues deriving from such case law, highlighting the difficulties hidden in the adoption of a generalized approach in the competitive assessment of the clauses at issue.