EU Court of Justice rules on restrictions of competition imposed by an online booking system used by travel agents

By Gabriele Accardo

On January 21, 2016 the Court of Justice of the European Union (“CJEU”) handed down its preliminary ruling in a case which posed the issue of whether and in what circumstances the implementation of a maximum discount level, via technical means by the administrator of the Eturas computer reservation system used by several travel agencies, amounts to a concerted practice in breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”). The question was referred to the CJEU by the Lithuania Supreme Administrative Court.

In 2010, the Lithuanian Competition Council launched an investigation into the Eturas system, stating that the travel agencies were coordinating among themselves the discounts offered on bookings made through a common booking system licensed by Eturas.

As discussed in a previous column (see Newsletter 4-5/2015, p. 12), the Competition Council found that the system’s administrator posted a notice informing its users that the discounts applicable to clients would be restricted to a uniform maximum rate, and that a technical restriction on the choice of a discount rate would be applied.

In particular, on 27 August 2009, the administrator of the Eturas system used the internal messaging system to send, to at least two of the travel agencies concerned, a “Message concerning the reduction of the discount for online travel bookings, between 0% and 3%”. The message read as follows: “Following an appraisal of the statements, proposals and wishes expressed by the travel agencies concerning the application of a discount rate for online travel bookings, we will enable online discounts in the range of 0% to 3%. This “capping” of the discount rate will help to preserve the amount of the commission and to normalize the conditions of competition. For travel agencies which offer discounts in excess of 3%, these will automatically be reduced to 3% as from 2:00 pm. If you have distributed information concerning the discount rates, we suggest that you alter that information accordingly.”

The following day, the websites of eight travel agencies displayed advertisements with a discount of 3% on the travel packages offered.

The Competition Council determined that the travel agencies which used the Eturas booking system and which had expressed no objection [to what?] were liable for a competition law infringement, since they could reasonably assume that all the other users of that system would also limit their discounts to a maximum of 3%. The Competition Council inferred from that that those agencies had informed each other of the discount rates which they intended to apply in the future and had thus indirectly — by way of implied or tacit assent — expressed their common intention with regard to conduct on the relevant market. This conduct was characterized as constituting a “concerted practice,” and the court concluded that Eturas played a role in facilitating that practice, even though it was not active on the market in question.

The referring court sought clarification as to the correct interpretation of Article 101(1) TFEU and, in particular, as to the allocation of the burden of proof. It had doubts as to the existence of sufficient factors capable of establishing, in the circumstances, the participation of the travel agencies in a horizontal concerted practice.

In particular, the referring court asked whether Article 101(1) TFEU must be interpreted as meaning that, where the administrator of an information system, intended to enable travel agencies to sell travel packages on their websites using a uniform booking method, sends to those economic operators, via a personal electronic mailbox, a message informing them that the discounts on products sold through that system will henceforth be capped and, following the dissemination of that message, the system in question undergoes the technical modification necessary to implement that measure, it may be presumed that those operators were aware or ought to have been aware of that message and, in the absence of any opposition on their part to such a practice, it may be considered that those operators participated in a concerted practice within the meaning of that provision.

The CJEU concluded that the referring court cannot presume, from the mere dispatch of a message such as that at issue in the main proceedings, that the operators which used the system were aware, or ought to have been aware, of the content of that message. Yet, in the presence of other objective and consistent indicia, the dispatch of that message may justify such a presumption. In any case, the operators should have the opportunity to rebut the presumption, for example by proving that they did not receive that message or that they did not look at the section in question or did not look at it until some time had passed since that dispatch.

The CJEU further held that, in the light of the circumstances of the case, a travel agency may be presumed to have participated in the concerted practice if it was aware of the content of that message. In particular, the CJEU referred to the characteristics of the information system put in place by the system administrator, as well as the technical restriction concerning the applicable discount. The system did not prevent travel agencies from granting discounts greater than 3%, but required them to take additional steps in order to do so. However, an anticompetitive concerted practice requires, in addition to the participating undertakings coordinating with each other (albeit tacitly), subsequent conduct on the market and a causal connection between the concerted practice and the market conduct.

Still, the CJEU held that if it cannot be established that a travel agency was aware of that message, its participation in a concerted practice cannot be inferred from the mere existence of a technical restriction implemented in the system at issue in the main proceedings, unless it is established on the basis of other objective and consistent indicia that it tacitly assented to an anticompetitive action.

Finally, the CJEU noted that in the peculiar circumstances of the case, a travel agency may rebut the presumption that it participated in an anticompetitive concerted practice by means other than publicly distancing or reporting to the administrative authorities.

In circumstances such as those at issue in the main proceedings, which do not concern an anticompetitive meeting, a travel agency is not aware of all of the competitors which were the addressees of the message sent by the system administrator, and therefore, the CJEU determined that the referring court may accept that a clear and express objection sent to the administrator of the ETURAS system is sufficient to rebut that presumption.

In addition, the court concluded that the presumption of the causal connection between the concerted practice and the market conduct could be rebutted by evidence of a systematic application of a discount exceeding the cap introduced by means of the technical restriction.