Spain’s competition authority, the National Competition and Markets Authority, has found that online travel agency Booking.com abused its dominant market position over the past five years. The authority fined the company 413.24 million euros (or about $447 million at current exchange rates) on Tuesday.
The National Authority for Competition and Markets opened an investigation into Booking.com in October 2022, following complaints from the Spanish Association of Hotel Managers and the Madrid Regional Hotel Association. The watchdog’s investigation found that Booking.com imposed unfair terms and conditions on hotels, which it said made it difficult for rival travel agencies to compete.
Booking.com had a market share of between 70% and 90% in Spain for providing intermediary services in online hotel bookings by online travel agencies during the period in question.
“The company has abused its dominant position since at least January 1, 2019 and until today by imposing unfair commercial conditions on hotels in Spain that use its booking intermediary services and restricting competition from other online travel agencies… that offer the same services,” the National Competition and Markets Authority wrote in a statement. press release [in Spanish; this is a machine translation].
The Commission concluded that Booking imposed an unfair pricing requirement on hotels using its platform that prevented them from offering their rooms on their own websites for less than the price offered on Booking.com, while the platform reserved the right to unilaterally lower the price offered by hotels via its website or app.
The CNCM also found fault with the issues relating to the clauses in the company’s general terms and conditions, noting that only the English version of the terms has legal value while the law applicable to the terms, and the competent courts, are in the Netherlands, where Booking.com is headquartered. This made it more expensive than it should have been for Spanish entities to sue Booking in the event of a dispute.
Additionally, the investigation findings indicate a lack of transparency regarding the value Booking provides to hotels through a series of subscription products that allow hotels to improve their position in the platform’s default rankings in exchange for paying higher commission fees or offering some of their rooms at discounted rates.
The National Competition and Markets Authority said Booking.com had been able to abuse its dominant position by restricting competition from other online travel agencies by using the total number of bookings at a hotel through its platform as a ranking criterion in default search results listings, thus encouraging hotels to focus their online bookings on Booking.com.
The panel’s findings also highlight Booking.com’s use of a performance requirement that it used as a benchmark for hotels accessing and remaining in two of the above subscription programmes – but found that it relied “primarily on the profitability of each hotel for Booking.com”.
“This encourages hotels that want to access or stay in the programmes to follow a pricing and availability policy that leads them to focus their sales on the platform, at the expense of other competing agencies,” the authority added.
The Spanish authorities’ penalty is divided into two sanctions of €206.62 million each for abuse of dominant position. The first is for unfair terms and conditions imposed on hotels in Spain, and the second is for restricting competition from other online travel agencies.
The Authority also imposed conduct obligations on Booking, requiring it to cease the offending behaviour and ensure that it does not engage in any other similar behaviour that could produce a similar effect in the future.
Booking.com has been contacted for a response to the CMC penalty. The company may appeal the penalty to the national court but must do so within two months.
Beyond Spain, the European travel giant faces tougher restrictions across the EU in the coming months, after being designated a gateway under the bloc’s Digital Markets Act in May. The company is expected to comply by mid-November, with penalties for non-compliance of up to 10% of global annual turnover (or 20% for repeat offenders).