On 29 March 2017 Istanbul’s 5th Commercial court of First Instance ruled on temporary suspension of Booking.com’s activities in Turkey on the unfair competition grounds. The Turkish court ruled in favor of Turkish Travel Agencies Association (“TURSAB”), and instructed the Information and Communication Technologies Authority (“BTK”) to freeze Booking.com’s reservation processes/search facilities for hotels in Turkey. Earlier this year Booking.com was heavily fined by the TCA for its anticompetitive practices. There is this recent trend of increased tension between the regulated businesses and online/digital entrepreneurs in various industries, as well as jurisdictions.
Implications of the Court injunction decision
As a result of the lawsuit filed by TURSAB in 2015 against Booking.com over unfair competition towards Turkish travel agencies (misleading customers, putting pressure of hotels, raising commissions, as well as tax evasion practices), currently Booking.com’s services in Turkey are (temporarily) suspended. The travellers will have to arrange their trips via travel agencies. Making reservations for hotels in Turkey but from abroad will still be possible. It is expected that such measure will be in favour of the travel agencies (however, the actual impact, particularly on the tourism industry of Turkey, is yet to be seen). The court further requested information from the TCA on whether an investigation was initiated against the Booking.com and whether any actions had been taken.
TCA’s investigation and fine
The TCA investigated and in January 2017 decided to impose an administrative fine of approx. USD 650 000/TRY 2.5 million on Booking.com for its ‘best price guarantee’ clause and ‘price/quota parity provisions’ in the contracts with hotels that were found to be anticompetitive agreements under the Turkish Competition Law, which could be neither block- nor individually- exempted.
Booking.com’s ‘parity clauses’ have been subject to antitrust investigations in other jurisdictions, i.e. Germany, France, Italy, Sweden, Austria, etc. Either prohibition or commitments approach has been taken by the competition authorities in the EU. In addition to antitrust measures, Austria adopted amendments to its law on unfair competition rendering online travel agents’ parity clauses null and void; similar position has been taken by France.
Both competition law decision of the TCA and now a suspension of activities decision by the Turkish court in relation to Booking.com are the results of the complaints from the TURSAB. TURSAB has pursued every possible platform to challenge actions of Booking.com in the interest of travel agencies in Turkey (but in fact in may have the opposite/negative impact on the tourism in Turkey). We cannot deny that there is a recent trend of the increasing tone between the regulated business and the networking digital platforms in many different industries. Booking.com (in addition to Uber, Airbnb, and PayPal) is a typical example of it.