The Spanish competition authority, Comisión Nacional de los Mercados y la Competencia (CNMC), has imposed a substantial fine of €413.24 million (approximately $447 million) on the online travel agency Booking.com.
The fine, announced on Tuesday, stems from findings that the company abused its dominant market position over the past five years, particularly affecting hotels in Spain and competing online travel agencies (OTAs).
Investigation and Findings
The CNMC initiated an investigation in October 2022, prompted by complaints from the Spanish Association of Hotel Managers and the Regional Hotel Association of Madrid. The probe uncovered that Booking.com maintained a dominant market share, ranging from 70% to 90%, in the provision of online booking intermediation services to hotels in Spain. This dominance facilitated the imposition of unfair commercial terms on hotels and restricted competition from other OTAs.
Unfair Commercial Conditions
The investigation revealed that Booking.com enforced a pricing clause preventing hotels from offering lower rates on their own websites than those listed on Booking.com. Moreover, the platform retained the right to unilaterally lower room prices, which hotels had to honor. The CNMC also criticized the legal terms that forced disputes to be settled under Dutch law and in Amsterdam courts, placing an undue burden on Spanish entities seeking legal recourse.
Lack of Transparency and Exclusionary Practices
The CNMC highlighted the lack of transparency surrounding Booking.com’s subscription products, such as the Preferred, Preferred Plus, and Genius programs. These programs allow hotels to improve their visibility on the platform in exchange for higher commissions or discounted rates. The authority found that the performance metrics used to rank hotels in these programs were primarily based on profitability for Booking.com, thereby encouraging hotels to channel more bookings through the platform and limiting their engagement with competing OTAs.
The CNMC determined that these practices not only created an inequitable commercial relationship with Spanish hotels but also stifled competition by making it difficult for other OTAs to enter or expand within the market.
Penalties and Future Compliance
The CNMC has divided the fine into two penalties of €206.62 million each, corresponding to the two categories of abuse: imposing unfair terms and conditions, and restricting competition from other OTAs. Additionally, the authority has mandated Booking.com to cease the infringing practices and ensure no similar conduct occurs in the future.
Booking.com’s Response and Future Implications
Booking.com has announced its intention to appeal the decision. In a statement, company spokesperson Allison Voight expressed strong disagreement with the CNMC’s findings, arguing that the EU’s Digital Markets Act (DMA) should be the appropriate forum for addressing such issues uniformly across Europe. The company emphasized the competitive nature of the online travel sector and the variety of choices available to both consumers and accommodation partners.
“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.“- spokesperson Allison Voight.
Beyond this case, Booking.com, designated as a gatekeeper under the EU’s DMA, faces tighter regulatory scrutiny across the European Union. Compliance with the new regime is required by mid-November, with potential penalties for non-compliance reaching up to 10% of global annual turnover, or 20% for repeat offenses.
The CNMC’s ruling highlights significant regulatory concerns around market dominance and fairness in digital marketplaces, setting a precedent for future enforcement actions both within Spain and across Europe.
