Regulators in Spain have hit Booking.com with a €413.24
million fine.
The decision Tuesday from the Comisión Nacional de los
Mercados y la Competencia (CNMC) – an independent regulator responsible for
enforcing competition laws - alleges the online travel agency has abused “its
dominant position over the past five years.”
The regulator said Booking.com has committed two specific abuses - "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."
Booking Holdings CEO Glenn Fogel first mentioned the investigation by Spanish regulators in February, during the company's call to share 2023 financial results with analysts and said it would appeal if the draft decision became final.
Subscribe to our newsletter below
In a statement sent to PhocusWire this morning, Booking.com said, "We strongly disagree with the outcome of the CNMC investigation and intend to appeal this unprecedented decision. We have said before that the [European Union'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 characterized 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."
The CNMC singled out Booking’s policy of charging a commission to hotels calculated on the number of reservations made through the OTA. Booking.com has controlled between 70-90% of the Spanish hotel market since 2019, the agency said.
In 2021, the Spanish Association of Hotel Managers and the Madrid Hotel Business Association reported the company for abusing its dominant position. In October 2022, the CNMC initiated a sanctioning procedure. It said the subsequent investigation confirmed anti-competitive practices that included:
- A price clause that prevents hotels from offering their rooms on their own websites for less than the price offered on Booking.com, while Booking.com reserves the right to unilaterally reduce the price that hotels offer through the Booking website or application.
- A lack of transparency in information about subscribing to Booking’s 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.
- 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 CNMC imposed two fines totaling €413.24 million on the company. It also imposed several behavioral obligations to ensure the actions would not continue. Booking.com has two months to file an administrative appeal against the order.
Javier Delgado, managing partner and EMEA CEO for hotel distribution specialist Mirai said: "The fine announced today by the Spanish competition authority (CNMC) represents an inflexion point in hotel distribution. There had been numerous rulings in different EU countries addressing Booking.com's anti-competitive practices but to date no fine had reached this level. It appears that competition authorities in some countries are, finally, aiming to level out the playing field between hotels and distribution platforms.
"The next milestone is to see how Booking.com interprets by mid November the DMA (Digital Markets Act), a EU coined bill, which to date has been playing in favor of OTAs, namely Booking.com given its relevance in EU markets."
In March, the Italian Competition Authority opened a similar investigation into Booking.com's competitive practices in that country, alleging the company was “reducing the freedom of Italian hotels in setting prices.”
*This is a developing story and may be updated.