France bans rate parity

France is to ban rate parity, after legislation outlawing the practice passed its third review by the French National Assembly yesterday.

Following confirmation from the French prime minister Manuel Valls (pictured), the legislation is expected to be adopted no later than today (10 July).

However, this new law contradicts commitments by the French Competition Authority accepted earlier this spring.

The commitments agreed between prominent online travel agents (OTAs) and the French Competition Authority included a provision that would allow for narrow rate parity, a condition that permits the OTA to restrict a hotel from offering lower public room rates on the hotel's own website than the rates offered through the agent's site. As a result, customers continue to see virtually the same price across all websites rather than a competitive marketplace with many sites competing with one another to offer the most attractive deal.

As recently as last week, prominent OTAs announced that they would be changing their terms and conditions across the UK and EU to allow for narrow rate parity in line with the French commitments. However, with the French Assembly enacting a law prohibiting rate parity and the January 2015 German court decision declaring rate parity clauses anti-competitive, the future of narrow rate parity in the hotel booking sector is uncertain, according to the British Hospitality Association (BHA).

Jackie Grech, BHA legal and policy director, said: "Rate parity has a tremendous impact on the way customers search, compare and purchase hotel rooms. Customers want to benefit from competition for their business between sites, and hotels want the freedom to attract customers to book directly with specials on their own sites.

"The decision by the French legislature is a step forward in returning competition to the hotel booking sector. Without rate parity customers will be able to shop around for the best hotel deals and are likely to see more competitive prices as a result. We look to the Competition and Markets Authority in the UK and the European Commission to take action to return competition to the online hotel booking market by banning rate parity."

BHA calls for OTA rate parity ban after French vote against >>

BHA slams OTAs for ‘stifling competition' when booking hotels >>