(Bloomberg) -- Booking Holdings Inc.’s terms preventing hotels from charging less on their own websites risk hurting competition, according to the European Union’s top court.
In a ruling on Thursday, the EU’s Court of Justice said that such terms, as well as now-discontinued curbs preventing lower prices on rival websites, “are liable to reduce competition between the various hotel reservation platforms and carry the risk of ousting small platforms.”
The court said that it had not been proved that the clauses “are objectively necessary,” in the operation of Booking’s services.
A Booking spokesperson said that the firm is disappointed with the judgment and parity clauses were “necessary and proportionate.”
The ruling by the Luxembourg-based EU court is likely to have wider ramifications, making it harder for online platforms across the whole travel industry to impose restrictions on suppliers.
The request for the ruling originally came from a Dutch court, which sought clarity on whether the clauses could breach the EU’s competition rules — fines for which can reach as high as 10% of global annual revenue.
Since 2015, a limited version of Booking’s clause prohibits only the offer of overnight stays at a lower price through hoteliers’ own sales channels, the EU court said.
Booking’s travel services site is among the list of platforms targeted by the EU’s Digital Markets Act, which cracks down on technology firms’ market power. Norwalk, Connecticut-based Booking enables users to make travel and hotel reservations, car rentals and vacation packages.
(Updates with Booking response in fourth paragraph)
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