Across Platform Parity Agreements

By November 27, 2020 Uncategorized

For years, EU competition authorities and courts have been questioning how to deal with price parity clauses used by online platforms (also known as the Most Favoured Nation clauses or MFN), particularly in the hotel booking sector. These clauses allow the platform to require suppliers not to offer lower prices or better terms on other platforms or on its own sites. Price parity clauses can be “broad” if they prevent the supplier from offering better terms on other distribution channels or if they can be “narrow” if they prohibit the supplier from offering better terms on its own site. Global growth in the online platform base has accelerated significantly, resulting in a significant share of the market in question. [i] Areas in which these businesses are flourishing in India include, among others, food delivery services, hotel and travel bookings, taxi services and the provision of products through e-commerce. [ii] On the one hand, it has contributed to the comfort and efficiency of the market. (iii) On the other hand, it has caught the eye of regulators in all jurisdictions, particularly with regard to price parity agreements. [iv] In particular, they have a considerable influence on competition, which is why several cases have occurred in Germany, the European Union and India, which involve, among other things, cartel, abuse of dominant position and anti-competition. [v] Not all cases involving online intermediaries are unlivable. A dominant market must be proven and a case must be established under Section 3 or Section 4 of the Act. In-depth analysis is needed to determine whether the agreement has significant negative effects on competition or creates a dominant market. However, the subject has recently been highlighted that is not sufficiently based on jurisprudence and judicial primacy. The two cases discussed below are the ICC`s analysis of the price parity agreement between hotel chains and the online booking platform, in reference to sections 3 (4) and 4 of the law.

The main reason for the adoption of these clauses, as defined by the ICC, is to exclude parasitism (a practice that allows sellers/service providers to freely use the work of online platform operators to engrave customers who are normally available at alternative prices minus onreliers). In some ways, it can stimulate innovation in online services that meet demand and thus broaden the consumer base. [xii] Across Platform Parity Agreements are agreements between suppliers and retailers that indicate a relative link between the prices of competing products or the prices charged between competing retailers. These agreements are a particular type of price relationship agreement. Price relationship agreements include a broad category of contractual clauses in which a seller`s price is linked/linked to another price, which may be that offered by other sellers for the same product or similar competing products, or the prices offered by the same seller for the same products to other buyers.