23 May 2016

Online platforms - travel agencies fined for cartel conduct

The Court of Justice of the European Union (CJEU) recently handed down a judgment holding that software restrictions on discounting on an online booking system used by multiple travel agents could amount to ‘cartel conduct’ in breach of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU).  

In such circumstances, parties will infringe competition law where they receive a message notifying them of the introduction of such a restriction from a system administrator and become aware of its content, but fail to either (i) ‘publicly distance’ themselves from the anticompetitive proposal, or (ii) to ‘systematically’ behave in a way that demonstrates they reject the anticompetitive proposal (e.g. by frequently applying discounts in excess of the discount restriction). 

The judgment considers, among other things, the intriguing question of how can one distance oneself from the conduct of a group when one does not know who all the members of the group are? The CJEU decision is discussed in more detail in our article published in Competition Law Insight
The CJEU decision was a preliminary ruling, requested by Lithuanian Supreme Administrative Court (Supreme Court), to clarify how EU competition law should be applied. On 4 May 2016, in light of the CJEU’s guidance, the Supreme Court partially upheld the original decision of the Lithuanian Competition Council (LCC), made in June 2012, which imposed penalties totalling approximately €1.5 million on the Lithuanian travel agencies that used the E-TURAS online platform. The Supreme Court however overturned the LCC’s findings in relation to some of the travel agencies, due to evidence insufficiently demonstrating ‘awareness’ of the proposed discount restrictions, and also reduced fines in relation to some other travel agencies. The Supreme Court’s decision is final and cannot be appealed further.

The CJEU judgment adds to the growing number of cases which provide helpful guidance on how EU competition law applies to digital markets and online platforms. 

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