Contract terms requiring parity, sometimes called most favoured nation clauses, come in two kinds:

• A wide parity clause stops the hotel offering better terms on any other channel, including rival online travel agents.

• A narrow parity clause stops the hotel offering better terms only on its own direct channels, such as its website, leaving it free to price differently elsewhere.

The UK position

Under the UK’s block exemption for vertical agreements, in force from 1 June 2022 until 1 June 2028, a wide parity obligation is a hardcore restriction. An agreement that contains one loses the benefit of the block exemption and is presumed to restrict competition, although the parties can still try to justify it. Narrow parity can still benefit from the exemption where neither party’s market share is above 30%.

The earlier UK case on online hotel booking concerned restrictions on online travel agents discounting room rates. The CMA closed it in September 2015 without deciding whether the law had been broken, after the online travel agents involved had dropped wide parity in July and August 2015.

Worth knowing

• Hardcore does not mean automatically illegal, but a wide parity clause is presumed to restrict competition and is unlikely to qualify for an individual exemption.

• The EU’s rules now differ from the UK’s, and EU decisions do not bind the UK.

• In UK package holiday trade talk, price parity usually means something else: agents asking tour operators not to undercut them by selling more cheaply direct.