Hotels accused of abusing the EU’s single-market spirit
Hotels accused of abusing the EU’s single-market spirit
06 FEBRUARY 2017 8:22 AM

The European Union has launched an investigation into alleged price discrimination across EU member states. So why has it never done the same for all states on alleged misuse of rate parity and most-favored-nation clauses? 

On 2 February, the European Union announced an investigation into hotel and travel company geo-pricing, that is, conducting business across the EU with all the benefit of being in a single trading bloc but charging different prices to different countries within it.

Such a practice goes against everything the EU stands for in its purest, Federalist form.

A single market means no tariffs between member nations. The price that a Cypriot will pay is the same price a Dane will pay, with the idea being market economics will dictate that both will pay the lowest price.

The EU is investigating several hotel and hospitality companies that it alleges have not been playing by the rules.

A news release issued from Brussels said that the probe was to “assess if certain online sales practices prevent, in breach of EU antitrust rules, consumers from enjoying cross-border choice and being able to buy consumer electronics, video games and hotel accommodation at competitive prices.”

EU commissioner Margrethe Vestager added that, following complaints from customers, the initiative will investigate “agreements regarding hotel accommodation concluded between the largest European tour operators on the one hand (Kuoni, REWE, Thomas Cook and TUI) and hotels on the other hand (Meliá Hotels).”

Thomas Cook and TUI are very large package travel companies, but they also recently started rolling out branded hotel product.

A single market does not just mean goods unloaded off shipping containers. It also means a digital single market.

What it means
Last week, I spoke to an anonymous source who is familiar with EU antitrust regulation after the investigation was announced. This person has widespread knowledge of individual EU member states’ legal attempts and successes to rule out rate-parity abuses and most-favored-nation clauses in online travel agencies’ partnerships with hotel companies.

This source told me that the inclusion of hotels in last Thursday’s announcement caught everyone by surprise.

I laughed upon hearing this. Who cares, I thought, about consumers being charged different prices when it comes to hotels, just make sure no one gets ripped off when it comes to purchasing “Grand Theft Auto V”?

My source added that he heard the firms specifically mentioned in the EU news release have allegedly admitted to having misunderstood the rules (this is me being diplomatic) and that if they change their ways, a slap on the wrist will be the final outcome, so long as they do not repeat the situation that the EU speaks foul of.

Woe betide, though, anyone else not already named who follows suit. At the least, heavy fines would follow, I have heard.

The source also said the likelihood of the EU dropping this investigation is very, very low.

I have always wondered why the EU as a bloc had not previously investigated and ruled against rate parity and MFN practices across all its member states.

As the pages of HNN show, rulings were conducted by individual countries, so efforts by France, Germany, Sweden and one or two other member nations might mean little when there are another 20 or more countries with no individual regulation.

There was a lot of noise about all of this from these few countries in 2015, but 2016 largely saw silence.

The power always was with the EU to treat the matter as a bloc and in one effort.

With all the talk at the moment in regards to the European Union being on its response to the United Kingdom’s proposed exit from the EU, it might be easy to forget that the grouping of 28 nations continues its work in many, many other areas.

One of the most important areas is that single market, which with the idea of the free movement of its members’ populations across all those nations, is at the heart of its worldview of Europe.

Right now, just speaking about my own country, it does seem to many in the U.K. that Brexit is not about the need to perfect trade deals—as opposed to the governmental transition in U.S.—but all about immigration.

Now that the immigration argument has been “won” by the Brexiteers, all attention has shifted away from concerns about supposedly unchecked immigration and the very real pressures on the National Health Service and other bodies to the ardent desire to remain in the European single market.

Britain wants to stay in the single market. The EU says the U.K. cannot have its cake and eat it, too. Just last week, Sir Ivan Rogers, the U.K.’s former ambassador to the EU who resigned in January—presumably he did not want to be at the helm of an idea that he thought would sink the country—has repeated the claim that the U.K.’s exit will cost the country some €60 billion ($65 billion).

Maybe the EU investigation can claw back some of that money if—presuming the U.K. is one of the countries paying above the odds for hotel rooms—the long-standing tradition continues of Brits searching for the sun on European vacations.

Email Terence Baker or find him on Twitter.

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