Parity Clause Agreement

Several Member States have adopted legislation dealing directly with the best price clauses. At EU level, parity clauses are dealt with in the latest Regulation 2019/1150 on promoting fairness and transparency for users of online brokerage services. The regulation came into force and applies from 12 July 2020.Note 45 Footnote 45 It contains rules relating to contract law, unfair competition law and rules of procedure, and aims to ensure transparency, fairness and efficiency of remedies in platform markets. Footnote 46 With respect to price parity clauses, Article 10, paragraph 1 of the P2B Regulation stipulates that an intermediation platform that uses price parity clauses on its commercial terms must also include the main economic, commercial or legal considerations of these restrictions. These reasons must be readily available to the public. The position with respect to “narrow” clauses is less clear. Similarly, the Court of Appeal found that the oligopolistic nature and high barriers to entry into the online platform markets are not necessarily due to narrow price parity clauses, but to a common feature of platform markets. Footnote 29 A broad parity clause removes the incentive for platforms to compete with the commissions they have collected from their sellers. This is because sellers are prevented from rewarding platforms that charge lower commissions with lower purchase prices on platforms.

The Swedish Court of Appeal then considered whether price parity clauses restrict competition. Such an assessment under Article 101, paragraph 1 of the EUTT is not only about the actual effects that have already occurred, but also about the potential effects on competition that are expected to occur in the future. Footnote 23 The Tribunal noted the absence of a generally accepted economic theory, which would qualify narrow price parity clauses as anti-competitive because of their nature. Accordingly, the court found that it would not be sufficient for the applicant to present theories about possible economic harm resulting from best-price clauses. Footnote 24 On the contrary, the Tribunal required factual evidence of anti-competitive effects and found that narrow price parity clauses had already been used for a considerable period of time. For such a presentation, the applicant Visita bore the burden of proof. The Tribunal assessed several economic assessments and concluded that they were not robust enough to demonstrate harm to competition. The purpose of this article is to explain and classify CFCs that provide a decisive overview of the Booking.com decision in Germany and the crippling effects on the European Union (“EU”).

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