A PYMNTS Company

Good Night, ‘Most Favoured Nation’ Clauses!

 |  May 30, 2021

By: Adrian Deuschle (D’Kart)

Price parity clauses or most favoured nation (MFN) clauses are a hot topic in the digital economy: In 2012, the Bundeskartellamt began investigating wide and narrow MFN clauses on hotel booking platforms. The German competition authority was not alone, but it was particularly strict. The divergence of national decision-makers on this topic within the EU was seen by some observers as a terrifying example of the disagreement in the digital single market. After all, with the latest Bundesgerichtshof decision, MFN clauses are no longer an issue for active cartel investigations, but rather for cartel damage claims.

Status of proceedings

The Bundesgerichtshof had to decide in this case on the compatibility of narrow MFN clauses with Art. 101 TFEU. With narrow MFN clauses, hotels are at least allowed by the platform to offer more favourable conditions on other platforms and offline distribution channels – yet not on their own websites. (The even more far-reaching obligations, so-called wide MFN clauses, had already been prohibited by a final judgement). The Bundeskartellamt had also seen the narrow version – no competition to the booking platform via the own website – as a violation of Art. 101 TFEU or Section 1 GWB and Sections 19, 20 GWB.

The decision of the Bundeskartellamt was overruled by the Düsseldorf Higher Regional Court. The Court essentially based its decision on the ancillary-restraints-doctrin (German: Immanenztheorie) according to which there is an unwritten exception to Art. 101(1) TFEU (and also § 1 GWB) stating that such restraints that are necessary for the implementation of a contract (i.e. immanent to the contract) that – apart from this – is neutral for competition, do not fall under the prohibition. In the view of the Düsseldorf Higher Regional Court, the best price clauses were necessary to prevent free-riding of consumers, who have noticed the hotel on the platform but make their booking on the hotel website. After the Bundeskartellamt appealed the ruling, the Bundesgerichtshof had to decide on the matter…