France's competition watchdog said on Tuesday that in coordination with the European Commission, and Swedish and Italian regulators it had accepted sweetened commitments from online travel agent booking.com to address competition concerns.
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These will go into effect in France, Italy and Sweden from July 1 for five years and will allow hotels to offer lower prices on other booking websites, the French regulator said.
Hotels will also be able to make offers directly to their customers by means other than the Internet and allot fewer rooms to booking.com than they keep for themselves.
In December, booking.com, owned by U.S-based Priceline Group, proposed scrapping the so-called pricing parity clause in its contracts preventing hotels from giving discounts to its rivals.
Booking.com came up with improved commitments following third-party feedback and market tests conducted by the regulators.
The pledges will be enforceable with the potential of fines of up to 5 percent of the company's global revenue of around $7 billion, the French competition authority said.
Booking.com said it was considering implementing the new commitments across Europe and was working with other national regulators towards that goal.
The European Commission, the anti-trust enforcer in the 28-country European Union, has been coordinating national probes in France, Italy and Sweden but has said it was not conducting its own investigation.
The regulator's probe in France was prompted by a consortium of hotelier federations.
Hoteliers have been trying to crack down on rate parity clauses in contracts with online travel agents (OTA) such as booking.com, arguing they remove flexibility in pricing.
Traditional hoteliers face rising competition from OTAs, which are hitting their margins and earning commission fees that can reach 20 percent of the cost of a room. Booking.com said its commissions are between 15 and 17 percent.
The French UMIH hotel federation welcomed booking.com's commitments as "a first step" but remained vigilant as other OTAs such as Expedia and HRS were not bound by these proposals.
Accor, Europe's largest hotel group, approached the French regulator in February, saying booking.com was abusing its dominant position.
It said on Tuesday that booking.com's commitments would allow hotels to "reward their loyal clients and regain control over pricing policies" but said Expedia and others must also comply to bring true competition among OTAs and lower their fees.
Expedia said it was working with the authorities to find a solution.