The new law amending the Federal Act against Unfair Competition (UCA) states that unfair competition occurs if an operator of an online platform for booking accommodation services uses general terms and conditions (GTCs) that restrict the pricing of accommodation facilities by means of price-fixing clauses, particularly price-parity clauses.
In general, a distinction is made between 'wide' and 'narrow' clauses. In the case of wide price-parity clauses, accommodation facilities undertake not to offer more favourable accommodation prices on any other distribution channel. In the case of narrow clauses, this obligation is limited to not offering lower prices on their own website than those indicated on the online booking platform. However, accommodation facilities may differentiate the prices (of the rooms) between the different online booking platforms.
In 2012, on the initiative of the Swiss hotel association, the Competition Commission (ComCo) opened an investigation into online booking platforms. In 2015 ComCo found wide price-parity clauses to be anti-competitive. By contrast, it expressly left open the assessment of narrow price-parity clauses because the online booking platforms had just introduced such clauses and time was needed to properly assess their impact.
In 2016 Council of States member Pirmin Bischof submitted the motion "Prohibition of adhesion contracts of online booking platforms against the hotel industry" to prohibit price-parity clauses of any kind in the contractual relationship between online booking platforms and hotels.
Although the Federal Council moved to reject the motion, in 2017 it was adopted by the Council of States and the National Council, and the Federal Council was instructed to ban narrow and wide price-parity clauses in contracts between online booking platforms and hotel businesses.
The Federal Council proposes to implement this amendment through a new article in the UCA.
The new Article 8a of the UCA declares such price-fixing or price-parity clauses in GTCs in the relationship between online booking platforms and accommodation businesses to be unfair competition.
The unfairness is said to lie in the fact that such clauses restrict accommodation providers' pricing freedom, thereby creating a disproportion between the contractual rights and the obligations of the parties involved.
According to this understanding, the unfairness lies in the unlawful contractual content of such GTCs, which results in nullity according to the general rules of the Code of Obligations.
The new provision is of a civil law nature. It must be enforced by the private market players involved. There is no provision for criminal penalties.
The bill has been criticised for having been initiated not in the interest of consumers, but rather in the interest of the hotel industry, thus serving individual business interests.
In this context, it is particularly troubling that the bill will probably not achieve its intended benefits for the hotel industry. The study carried out to determine the regulatory consequences (regulatory impact assessment) showed that the proposed ban on price-parity clauses would give accommodation facilities only greater legal room for manoeuvre. However, a significant improvement in their market position with regard to online booking platforms is hardly to be expected.
Further, the proposed provision would contradict the Cartel Act, which aims, among other things, to promote competition. This is because price-parity clauses have a pro-competitive effect and offer consumers tangible benefits. Therefore, it is unsurprising that ComCo did not object to narrow price-parity clauses in its last ruling in this regard. The consequence of this change in the law would be a contradictory duplication of the Cartel Act and the UCA and a resulting legal uncertainty.
For online booking platforms, the entry into force of this regulation would mean that they would need to review their GTCs with accommodation providers and adapt them accordingly.
The consultation period expired at the end of February 2021. It remains to be seen how the Federal Council will evaluate the responses to the consultation and to what extent it will adapt the new law accordingly.
