The Hungarian Competition Authority's (GVH) previous sector inquiries and measures have indicated that the authority's primary objective is to enforce extensive consumer welfare. The accelerated sector inquiry is a frequently used new tool in the hands of the GVH, which allows the authority to examine a sector comprehensively and propose immediate action. The GVH's proposals, if implemented, will bring fundamental changes to the online booking service sector.

1. GVH's favourite new tool: the accelerated sector inquiry

In accelerated sector inquiries, the GVH collects information on the market concerned, taking into account the contributions of market players, and then takes measures and often proposes regulatory action. The latest sector inquiry into the online booking industry follows further sector inquiries in the non-perishable food market and in the dairy market. 

As we previously covered the GVH has initiated an accelerated sector inquiry into the online accommodation booking and service market in Hungary. The current investigation follows an earlier sector inquiry conducted in 2016, in which the GVH had already investigated the regularity of price parity clauses of service providers. 

2. Draft report following the sector inquiry into the booking service sector

The investigation was necessary due to a number of consumer complaints and increased media attention indicating that there may be potential irregularities affecting consumers in the market practices of one of the largest online accommodation providers. Therefore the GVH reviewed the market in detail and drew a number of significant conclusions in its draft report.

In its report the GVH

• invites the legislator to prohibit online accommodation intermediaries from using so-called price parity clauses, which require accommodation providers to undertake to the online booking service provider that they will not offer the given accommodation at a lower price than the price set on their platform, or on their own platform;
• recommends that online service providers should make the ranking of search results transparent, so that consumers can make informed choices that benefit them; and
• in the light of numerous complaints from accommodation providers, proposes to set out a regulatory framework for the general terms and conditions of online booking service providers in order to improve the efficiency of complaint handling mechanisms between online providers and accommodation providers and to balance the legal consequences of failure to perform by each party.

Market players have 30 days to comment on the draft report. The authority will consider the observations and publish its final report at a later stage.

3. Summary

As the GVH outlines in its press release, tourism is one of Hungary's leading industries, accounting for more than 10% of GDP and employing hundreds of thousands of workers. The changes proposed by the GVH will fundamentally affect the business practices of online booking service providers, prompting market players to follow developments in the draft report with increased attention.

We will continue to report on the latest developments and changes of legislation affecting market participants.

For more information, please contact, Gábor Kutai, Marcell Fekete or Dániel Arányi.

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