CNMC fines Booking.com nearly USD 450 million for exploiting its dominant market position over the last 5 years
Spain’s competition watchdog authority, the CNMC, has found that online travel agency Booking.com abused a dominant market position over the past five years. It fined the company Euros413.24 million (or around USD 447 million at current exchange rates) for unfair terms and restricting rivals.
The practices have affected hotels located in Spain and other online travel agencies that compete with the platform. Its clauses represent an unfair imbalance in the commercial relationship with hotels located in Spain. By better positioning hotels with the most bookings on Booking.com, it has prevented other online agencies from entering the market or expanding.
The CNMC opened an investigation of Booking.com back in October 2022, following complaints by the Spanish Association of Hotel Managers and the Regional Hotel Association of Madrid. The watchdog’s probe confirmed that Booking imposed unfair terms and conditions on hotels that the authority said made it difficult for rival travel agencies to compete.
Booking.com held a share of between 70% and 90% of the market in Spain for provision of online booking intermediation services to hotels by online travel agencies over the period in question.
“The company has committed two abuses of its dominant position since at least January 1, 2019 until today by imposing various unfair commercial conditions on hotels located in Spain that use its booking intermediation services and restricting competition from other online travel agencies… that offer the same services,” the CNMC wrote in a press release. Further the press release states as below:
Abuse of exploitative dominant position
By imposing a number of unfair trading conditions on hotels located in Spain, in particular:
- A price clause that prevents hotels from offering their rooms on their own websites for less than the price offered on Booking.com (4), while Booking.com reserves the right to unilaterally reduce the price that hotels offer through the Booking website or application.
- Various clauses whereby (i) only the English version of the Booking.com General Terms and Conditions (GDT) has legal value, (ii) the law applicable to the GDT is that of the Netherlands and (iii) the competent courts are those of Amsterdam in the event of a dispute between the parties.
- Lack of transparency in information about the impact and profitability of subscribing to the Preferred, Preferred Plus and Genius programs. These programs allow hotels that subscribe to them to improve their position in Booking.com’s default results ranking, in exchange for a higher commission or by offering discounts on the best-selling or cheapest room that the hotel has on Booking.com.
Abuse of exclusive dominant position
By restricting the competition that other competing online travel agencies can exercise through the following formulas:
- Using the total number of reservations for a hotel through Booking.com as a ranking criterion in Booking.com’s default search results list. This encourages hotels to concentrate their online bookings solely through Booking.com, preventing competitors from entering or expanding into the market.
- The use of a performance requirement , as a criterion for accessing and remaining in the Preferred and Preferred Plus programs, based primarily on the profitability of each hotel for Booking.com. This encourages hotels that want to access or remain in the programs to follow a pricing and availability policy that leads them to concentrate their sales on the platform, to the detriment of other competing agencies.
Effects of behaviors
Unfair commercial conditions prevent hotels from offering lower room prices on their own websites, while Booking.com reserves the right to lower the room price that the hotel publishes on Booking.com. In the event of a dispute over the General Contractual Terms (GDT), they cannot resort to Spanish courts and must use Dutch law, which generates unfair litigation costs.
The lack of transparency prevents them from making informed decisions about whether or not to subscribe to the Preferente, Preferente Plus and Genius programs, which are very important for hotels located in Spain.
The full use of hotel reservations on Booking as a ranking criterion in Booking.com’s default ranking of results, and the requirement of performance (the profitability of each hotel for Booking) to access or remain in Preferente and Preferente Plus, restrict competition from other online travel agencies and result in hotels not being able to access better commercial conditions in the provision of online booking intermediation services.
Sanctions and obligations
The CNMC imposes two fines on Booking.com of 206,620,000 euros for each of the single and continuous infringements of abuse of dominant position: (i) the imposition of a series of unfair commercial conditions to hotels located in Spain and (ii) the restriction of competition from other online travel agencies when offering online booking intermediation services to hotels located in Spain, respectively. The total fine is 413,240,000 euros.
It also imposes several behavioural obligations on the applicant to ensure that neither the conduct that gave rise to the infringements, nor any other conduct that may produce an equivalent effect, continues in the future.
Responding to the same, Booking.com gave the following statement: “We strongly disagree with the outcome of the CNMC investigation and intend to appeal this unprecedented decision. We have said before that the EU’s Digital Market Act is the right forum to discuss and assess the majority of these issues, presenting an opportunity to agree on solutions that apply across Europe rather than country by country. Booking.com operates in a highly competitive sector, and in an industry characterised by a high degree of choice for businesses and consumers alike. We offer accommodation partners support programs such as our Preferred Plus and Genius that they can opt into. The decision today by the CNMC does not take this into account, adding to a lack of consistency for consumers and accommodation partners in Spain, against a global backdrop.”
Beyond Spain, the European travel giant is facing tighter regulation across the EU in the coming months, following its designation as a gatekeeper under the bloc’s Digital Markets Act back in May. It will be expected to be compliant with that regime by mid November with the risk of penalties for non-compliance that can reach up to 10% of global annual turnover (or 20% for repeat offenses).
EXPERT OPINION
**Response from Michael S. Howard, CEO of Rasa Hospitality**
I acknowledge the CNMC’s findings regarding Booking.com’s market practices. While we agree in theory with the judgment’s focus on promoting fair competition, it is essential to emphasize that hotels should retain the authority to control their B2C partners and associated rates. This autonomy allows hotels to maintain pricing integrity, brand reputation, and the ability to offer guests the best value directly. As the industry evolves, it’s crucial for all stakeholders, including OTAs, to collaborate transparently, ensuring a balanced market that benefits both businesses and consumers. We believe that a fair and equitable marketplace is essential for fostering innovation and growth in the hospitality sector.