Prosecution of price discrimination and geo-blocking on the rise

On 21 February 2020, the European Commission has fined the Spanish hotel group Meliá for creating price discriminations for consumers of different EU member states. In particular, the Commission sanctioned Meliá’s restrictive clauses in its agreements with tour operators and issued a fine of €6.678m.

Depending on their place of residence, consumers within the European Economic Area were offered different conditions and prices when booking their holidays through these tour operators. The Commission concluded that this discrimination against customers on grounds of their nationality or country of residence was not only going against the European Spirit but also violated European antitrust law. In February 2017, following complaints from consumers, the Commission therefore initiated antitrust proceedings to examine Meliá's agreements on hotel accommodation.

The investigation notably also covered such agreements between the four largest European tour operators (Kuoni, REWE, Thomas Cook and TUI). The Commission determined that Meliá's contracts with the tour operators restricted active and passive sales of hotel accommodation. More precisely, Meliá's general terms and conditions contained a clause in contracts with tour operators according to which those contracts applied only to reservations made by consumers resident in certain specified countries.

The Commission assumed that these agreements led to a potential customer allocation on the European internal market. Tour operators were prevented from offering hotel accommodation freely throughout the EEA. They could not respond to direct requests from consumers residing outside their assigned regions. It was therefore impossible for consumers to obtain a complete picture of the hotel accommodation available or to book hotel rooms at the lowest price with a tour operator in another member state. Accordingly, consumers were deprived of the main advantages of the internal market, namely greater choice and lower prices.

In the recent years the European institutions have increased their efforts to combat discrimination of customers based on their nationality or country of residence. These practices had become especially widespread in online sales and are generally referred to as geo-blocking or sometimes in its softer form, when customers are only redirected to a localised service, geo-filtering.

While the Commission still addressed the issue at hand with reference to the general antitrust rules on the limitations of market allocations in distribution systems and set a rather moderate fine, the authority had also referenced the issue of geo-blocking during the proceedings. In the end, the parallel proceedings against the tour operators were closed by the Commission but it is questionable whether accomplices would be shown the same leniency in similar future cases: The practices at hand would presently also be covered and sanctioned by the European Geo-Blocking Regulation ((EU) 2018/302), which came into force in December 2018.

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The Commission's decision once again shows, that price discrimination is increasingly becoming a focus of attention of the competition authorities and that the provisions of the Geo-Blocking Regulation should also be taken very seriously.

We will of course keep an eye on the further development. In the meantime, please do not hesitate to reach out to Jens Steger or Sven Klüppel in case you would like further information in this regard.