Online booking platforms will be kept on a tight leash with the new Art. 8a UWG. As of December 1st 2022 parity clauses concerning the price, availability or conditions will be prohibited in contracts between online booking platforms and accomodation providers .
The development of the new Art. 8a UCA
On 16 November 2022, the Federal Council announced in a media release that the use of parity clauses in accommodation establishments will be prohibited as of 1 December 2022. This means that Art. 8a of the Federal Act against Unfair Competition (UCA, SR 241) will come into force. According to this, it is particularly unfair for an operator of an online booking platform of accommodation services to use general terms and conditions that directly or indirectly restrict the pricing and supply of accommodation establishments through parity clauses, namely with regard to price, availability or conditions.
This amendment to the law is due to the motion of Council of States member Pirmin Bischof of 30 September 2016 “Prohibition of gagging contracts of online booking platforms against the hotel industry”, commonly known as the “Lex Booking”, which requires the Federal Council to prohibit narrow and broad price parity clauses in contracts between online booking platforms and hotel businesses.
According to the motion, the purpose of the ban is to promote direct sales by accommodation businesses via their own websites and thus to strengthen their competitiveness. The use of price fixing clauses, in particular price parity clauses, on the other hand, restricts the freedom of accommodation providers to set their own prices. The motion provides for a ban on both narrow and broad price parity clauses. In the case of narrow price parity clauses, an accommodation provider undertakes not to offer prices to an online booking platform on its own website that are lower than the prices offered on the platform. However, the accommodation provider does not have to offer the same price to all online booking platforms. In the case of broad price parity clauses, on the other hand, an accommodation provider undertakes not to offer lower prices on any other distribution channel, i.e. including other competing online booking platforms, than on the one online platform. In particular, such lower offers may not be made on the telephone or by e-mail.
Already in December 2012, the Competition Commission (WEKO) opened an investigation against the three online booking platforms Booking.com, Expedia and HRS on the initiative of HotellerieSuisse, among other things on suspicion that parity clauses between the said platforms and the hotels have a restrictive effect on competition. At the time, in its decision of 19 October 2015, the Competition Commission judged the use of broad price parity clauses to be a violation of the Cartel Act (Cartel Act, SR 251). The assessment of narrow price parity clauses, on the other hand, was expressly left open. However, according to the Competition Commission, action can already be taken against narrow parity clauses on the basis of the current Cartel Act and declared inadmissible by the competent court if they lead to an inadmissible impairment of effective competition.
Moreover, the relationship between accommodation providers and online booking platforms can also be assessed under competition law in individual cases under the provisions on relative market power in Art. 7 KG, which Parliament adopted as part of its indirect counter-proposal to the Fair Price Initiative. Thus, the concept of relative market power offers new possibilities for prohibiting bilateral contractual relationships with dependency situations under antitrust law. In view of this, the Federal Council had originally planned to implement the Bischof motion within the framework of the indirect counter-proposal to the “Fair Price Initiative”, but decided against this due to the results of the consultation.
The new provision in detail
The provision of Art. 8a UCA concerns platform operators that maintain online booking portals for overnight stays in hotels and other accommodation establishments. In deviation from the wording of the motion, Article 8a UCA protects all accommodation providers (e.g. also providers of holiday flats, flats or youth hostels). Unfair general terms and conditions (GTC) of the platform operator are targeted. According to the prevailing case law of the Federal Supreme Court, general terms and conditions are contractual provisions that are pre-formulated in a standard manner with regard to typical contracts of private individuals (cf. BGer v. 02.06.2015, 4A_47/2015). Consequently, individual agreements do not fall under Article 8a UCA unless they also contain pre-formulated clauses that have not been individually negotiated. It is also irrelevant in which concrete form (e.g. printed on a contract form, as an attachment or electronically) the unfair GTC are used.
These GTCs are unfair if they contain price fixing clauses. This also includes the above-mentioned price parity clauses, as well as clauses according to which an accommodation provider undertakes not to undercut a certain predefined price. Thus, price maintenance clauses that seek to prohibit accommodation providers from offering cheaper accommodation prices on their own website or via other distribution channels than on the online booking platform will be unfair in the future.
Furthermore, so-called availability and condition parity clauses are also prohibited. Availability parity clauses regulate the extent to which the type and number of rooms offered on other sales channels may differ from the offer on the online booking platform. Parity of terms clauses, on the other hand, refer to the equivalence of the offer between online booking platforms and other sales channels and regulate the extent to which the offer on other channels may differ. This often includes further contractual aspects such as cancellation conditions, but also included additional services such as breakfast or discount vouchers for local mountain railways.
Legal consequence
The new provision of Article 8a UCA is, like Art. 8 UCA, a civil law norm. Accordingly, the legal consequences are carried out via the civil law instruments of the UCA; in the case of unfair conduct under Art. 8a UCA, the defence actions of Art. 9 para. 1 and 2 UCA as well as the reparatory actions under Art. 9 para. 3 UCA are available. Competitors, suppliers or customers who are threatened or injured in their economic interests by unfair general terms and conditions clauses are entitled to claim and sue. Professional and trade associations are also entitled to sue (Art. 10 para. 1 lit. a UCA).
There is no criminal sanction under Art. 23 UCA. However, due to the unlawfulness of such an unfair general terms and conditions clause, the legal consequence of nullity according to Art. 20 of the Code of Obligations (OR; SR 220) occurs. Thus, such a clause cannot have any legal effect.
Scope
As with the other provisions of the UCA, the principle of effect also applies here, which means that Art. 8a UCA always applies if the unfair conduct has an effect on the Swiss market. This is likely to be the case especially if the accommodation business concerned is located in Switzerland. The contract between the accommodation provider and the platform operator, on the other hand, is in principle subject to the law that the parties have agreed in the GTC. If a foreign law applies to the contract, the corresponding provision of this legal system replaces the consequence of nullity according to Art. 20 CO. Should – which is rather unlikely – the relevant contract law allow the enforcement of such unlawful clauses, then, according to the Dispatch on Art. 8a UCA, the clauses would still be irrelevant from a Swiss perspective due to Art. 17 and 18 of the Federal Act on Private International Law (IPRG; SR 291) (cf. Dispatch on the Amendment of the UCA, BBI 201 2858, 13).