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30 June 2022
0
Melia (Holiday Pricing) (AT.40528)

Jurisdiction

Jurisdiction:
Europe
Official language:
English

Case ID

(Judicial) Authority:
European Commission
Case number:
AT.40528
Name of parties:
Meliá Hotels International, S.A. (‘Meliá’)
Date of decision:
21/02/2020
Source:

Information re: proceedings

Type of proceedings:
Decision on the merits
Instance:
Competition authority
Connected decisions:

/

Additional information:
Meliá cooperated with the European Commission (‘Commission’), for which it received a fine reduction of 30%. This cooperation consisted of acknowledging the infringement of Article 101 TFEU and Article 53 of the EEA Agreement, as well as cooperating on the provision of evidence, thereby strengthening to a certain extent the Commission’s ability to prove the infringement, and waiving procedural rights, resulting in administrative efficiencies.

1. CASE SUMMARY

A. Summary of facts

Meliá, an undertaking with registered office in Spain, is one of the largest hotel companies in the world and the largest hotel chain in Spain in both resort and city hotels. Its business model comprises three divisions, namely Hotels, Real Estate and Club Meliá. This decision concerns the Hotels division. 

The case concerned agreements regarding hotel accommodation concluded between Meliá and certain tour operators (Kuoni, REWE, Thomas Cook and TUI), which sourced accommodation from Meliá and distributed it to consumers.

From 1 January 2014 to 31 December 2015, approximately 30% of the contracts governing the commercial relationship between Meliá and the tour operators contained a clause according to which the contracts were valid only for reservations of consumers who were resident in specified countries. If Meliá established that the country of residence of the consumer was not among those listed in the contract, Meliá was entitled to reject the reservation.

B. Notes on case history

Antitrust investigations had also been opened against the four tour operators (see AT.40524, AT.40525, AT.40526, AT.40527). However, the Commission decided not to further pursue these cases..

C. Legal analysis

C.1 - Article 101(1) TFEU – object restrictions

The infringement involves the implementation and enforcement of a series of agreements aimed at restricting active and passive cross-border sales hotel accommodation. Such conduct has as its object the restriction of competition within the meaning of Article 101(1) TFEU. The Commission concluded that Meliá's practices partitioned the single market and prevented the tour operators in the EEA from freely selling hotel accommodation cross-border, to the ultimate detriment of consumers.

The Commission confirmed that it is irrelevant whether the restrictive clauses have been enforced. (§42)

The Commission considered that the infringement by Meliá was a single and continuous infringement, because of the existence of a similar pattern in 2014 and 2015, the use of the same standard terms and the identical object of the contracts. (§52) 

Lastly, the Commission emphasized that the cross-border sales restrictions in the contracts were liable to affect trade between Member States, since this was the very purpose of the contracts. Therefore, the contracts had an appreciable effect on trade between Member States and between contracting parties to the EEA Agreement. (§54)

C.2 - Article 101(3) TFEU – no block or individual exemption

The Commission confirmed that, due to the hardcore nature of the restrictions, Regulation 330/2010 (the Vertical Block Exemption Regulation or ‘VBER’ at that time) did not apply. 

Despite the presence of a hardcore restriction in an agreement, the conduct could however possibly still be exempted under Article 101(3) TFEU or Article 53(3) of the EEA Agreement. 

In this case, however, the Commission decided that the conditions for such an individual exemption were not fulfilled. The main reasons were that:

  • Meliá did not provide any arguments in this respect;
  • the contracts did not directly address the efficiencies sought by Meliá;
  • consumers would not get a fair share of the resulting benefit; and
  • clauses that restrict the ability of tour operators to sell accommodation to consumers outside of specified country/countries were not indispensable for improving the efficiency of Meliá hotel accommodation.
C.3 - Article 101(3) TFEU – no block or individual exemption

When determining the amount of the fine, the Commission noted that account should be taken of the fact that restrictions of active and passive sales restrict competition by their very nature and that the restriction covered the whole EEA. At the same time, the Commission noted that vertical restraints are generally less harmful than horizontal ones. 

After a fine reduction of 30% in view of the cooperation provided by Meliá, a fine of EUR 6,678,000 was imposed on Meliá.

2. QUOTES

"In this regard, the Clause did not distinguish between reservations which followed unsolicited requests from consumers and those actively sold by the tour operators. Therefore, the Clause not only discouraged the tour operators from advertising Meliá’s hotel accommodation outside the specified market or markets but also covered situations in which a reservation at one of Meliá’s hotels was made upon direct request of consumers, who were resident outside the defined markets, to a tour operator party to the Relevant Contracts." (§47)

"The Relevant Contracts prove the existence of a similar pattern followed by Meliá as regards the distribution of its hotel accommodation in 2014 and 2015. This is underpinned by the fact that the Relevant Contracts were all based on Meliá's Standard Terms containing the Clause. The identical object of all Relevant Contracts in force in that period was to differentiate between European consumers on the basis of their country of residence. Therefore, the agreements resulting from the Relevant Contracts (see recitals (34) and (49)) constitute a single and continuous infringement of Article 101(1) TFEU and Article 53(1) of the EEA Agreement." (§52)

"In 2014 and 2015, the tour operators who were party to the Relevant Contracts distributed accommodation at Meliá hotels located in various Member States to consumers resident in various Member States or EEA countries. Since the Relevant Contracts contained cross-border sales restrictions, they were liable to affect trade between Member States. The very purpose of these types of restrictions is to prevent trade between Member States. Therefore, the Relevant Contracts had an appreciable effect on trade between Member States and between contracting parties to the EEA Agreement." (§54)

"Secondly, consumers should get a fair share of the resulting benefit. In this case, even though there might have been a positive effect for consumers in certain markets (namely those for whom the lower price was earmarked), 'negative effects on consumers in one geographic market or product market (namely the consumers who were prevented from buying the accommodation at that lower price) cannot normally be balanced against and compensated by positive effects for consumers in another unrelated geographic market or product market'." (§63)

"In this case, account should be taken of the fact that restrictions of active and passive sales, by their very nature, restrict competition within the meaning of Article 101(1) TFEU and Article 53 of the EEA Agreement. However, the fact that vertical restraints are generally less harmful than horizontal ones should also be taken into account." (§86)

3. RELEVANT LEGISLATION

  • Article 101 TFEU
  • Article 53 EEA Agreement
  • Regulation 330/2010
  • Fining Guidelines

4. RELEVANT LITERATURE

For more guidance on territorial and customer restrictions outside a selective distribution network, see F. WIJCKMANS and F. TUYTSCHAEVER, Vertical Agreements in EU Competition Law, Oxford University Press, 2018, §6.89 – 6.235.

5. PRACTICAL SIGNIFICANCE

This case is relevant for practitioners because it illustrates that: 

  • restrictions on out-of-territory sales are object restrictions;
  • the mere existence of contractual clauses containing such restrictions is sufficient to infringe Article 101(1) TFEU, hence the clauses do not have to be enforced;
  • when the VBER does not apply due to the inclusion of hardcore restrictions, it is in theory possible to obtain an individual exemption;
  • fines for vertical restraints are lower because vertical restraints are considered less harmful than horizontal restraints.

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