Spain: Digital markets in the spotlight - CNMC fines Booking.com for abuse of dominant position

This summer, the CNMC imposed a fine of €413.24 million on the leading global online accommodation booking platform Booking.com (“Booking”). The fine was for an alleged abuse of its dominant position on the Spanish markets for the intermediation of online booking services to hotels by online travel agencies (“OTAs”) and online retailing of hotel bookings. 

Booking acts as an OTA in these markets, serving as an intermediary between accommodation providers such as hotels, hostels, and apartments, and customers, who can make reservations by comparing prices. As part of these services, Booking charges a commission calculated on the amount of bookings made through its platform. 

The CNMC found that Booking would have breached Article 2 of the Spanish Competition Act (“LDC”) and Article 102 of the TFEU, by carrying out conduct constituting exploitative and exclusionary abuse. The CNMC’s decision concludes that Booking’s practices have negatively impacted Spanish OTAs operating in the same markets over the past five years.

In addition to the fine, the CNMC has imposed several behavioural obligations on Booking, to prevent the platform from engaging in such or similar conduct in the future.

1. Exploitative Abuse

According to the CNMC’s decision, Booking imposed several non-equitable commercial conditions on hotels:

1. Unfair commercial terms: Booking  enforced a "price parity clause" preventing hotels from offering lower prices on their own websites compared to those listed on Booking. Furthermore, Booking reserved the right to unilaterally reduce room prices, thereby undermining hotels' pricing autonomy.
2. Contractual imbalances: Acceptance of Booking’s general terms and conditions was mandatory to be listed on its website and app. Under these terms, only the English version was legally valid, and all disputes were governed by Dutch law, with the Amsterdam courts having exclusive jurisdiction on any matter arising between the parties. According to the CNMC, this created significant legal and financial burdens for Spanish hotels (e.g. unequal litigation costs in case of dispute) and helped Booking to maintain and reinforce its dominant position.
3. Opaque “preferential” programs: According to the decision, Booking’s Preferred, Preferred Plus, and Genius programs lacked transparency, making it difficult for hotels to assess their impact and profitability. These programs required higher commissions or deeper discounts, compelling hotels to favour Booking over other competing platforms to maintain visibility and ranking.

2. Exclusionary Abuse

Booking also restricted competition from other competing OTAs as follows:

1. Market positioning: The ranking of hotels on Booking was influenced by the total number of bookings made through the platform. This incentivised hotels to consolidate their online sales exclusively via Booking, marginalising competing OTAs.
2. Program entry and permanence criteria: Access to and continuance in Booking’s “preferential” programs were contingent on the profitability generated for Booking. According to the CNMC, this practice encouraged hotels to follow a specific pricing and availability policy aiming to consolidate their sales on the platform, to the detriment of other OTAs.
3. CNMC’s additional considerations of the investigated conduct

The CNMC has stated that hotels need to carefully scrutinise their agreements with OTAs, ensuring fair and balanced terms that protect their pricing autonomy and legal rights. Hotels are also encouraged to diversify their distribution channels to reduce dependency on dominant platforms, thereby mitigating risks associated with unfair commercial practices. 

In addition, it is noteworthy that, during the CNMC’s investigation, the Competition Directorate (which is the body in charge of conducting the investigation before the CNMC’s Council issues a final decision) also proposed to sanction Booking for an infringement of Article 3 of the LDC, consisting in acts of unfair competition derived from the exploitation of the economic dependence that Spanish hotels would have vis-à-vis Booking. However, the CNMC’s Council considered that the unfair conduct had not been proven in an autonomous and sufficient manner and stated that the accreditation of an abuse of a dominant position does not automatically imply the existence of a concurrent infringement or distortion of free competition by unfair acts.

In any event, the CNMC’s decision is not yet final since an appeal may still be filed against it within the two-month period from its notification. Booking has publicly stated its intention to challenge the CNMC’s decision.

3. Increasing competition concerns in digital markets

This case is another example of a remarkable trend towards a more energetic and vigilant focus to ensure fair competition within the tech industry. Indeed, this is the highest fine ever imposed by the CNMC. 

In line with the dynamics and ex-ante obligations established in Regulation (EU) 2022/1925 (“DMA”), this case highlights the concern for a proactive regulatory approach to digital markets, advocating for a fair and competitive environment that fosters innovation while protecting smaller market participants. In fact, in May this year, the European Commission announced the designation of Booking as a “gatekeeper” under the DMA for its online intermediation services. Booking has thus become the seventh gatekeeper designated by the Commission, together with Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft. In total, 24 core platform services provided by these gatekeepers have so far been designated:

The very nature of these kinds of platforms requires them to comply with specific obligations laid down in this Regulation in their daily operations. Among these obligations, the gatekeepers must not prevent business users from offering the same products or services to end users through other online channels (or through their own direct online sales channel) at different prices or conditions than those offered through the online intermediation services of the gatekeeper. Booking now has until the end of the year to fulfill its gatekeeper responsibilities. The aim is to encourage more equitable conduct and improve competition in the digital marketplace.

In this regard, as it can be noted from the CNMC’s decision, Booking argued that the CNMC’s conclusions would overlap with the provisions of the DMA, claiming that this would cause a conflict with the obligations imposed by this Regulation. In this respect, the CNMC stated that the DMA does not focus on the actual or alleged effects of a conduct adopted by a gatekeeper to assess its possible (ex-post) anticompetitive character, but rather establishes a set of (ex-ante) obligations to be fulfilled regardless of whether the actual conduct carried out by such gatekeeper distorted competition or not. On this basis, the CNMC clarifies that the DMA is not intended to replace the competition law-based assessment, but to complement it. 

If you need more information or further guidance in this area, please contact Candela Sotés.

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