On February 21, 2020, the Commission fined hotel group Meliá €6.7 million for restricting cross-border sales through the terms of its hotel accommodation agreements with tour operators. These terms allegedly forced tour operators to discriminate between EEA customers based on their country of residence. The Meliá decision is noteworthy for two reasons. It reiterates the Commission’s strict stance on any measures partitioning the EU Single Market, a theory of harm the Commission has applied frequently in recent years. It also continues the Commission’s now frequent practice of rewarding cooperation in non-cartel cases.
In February 2017, spurred by the preliminary results of the Commission’s e-commerce sector inquiry, which suggested widespread use by hotels of restrictive clauses, the Commission opened an investigation into hotel accommodation agreements between Meliá and major EU tour operators. The Commission’s investigation focused on whether Meliá’s agreements discriminated between end-consumers on the basis of their nationality or country of residence.
Meliá’s standard terms and conditions in its hotel accommodation agreements with tour operators limited the validity of the agreements to reservations made by customers in certain countries. The clauses restricted both active and passive sales of rooms in Meliá hotels. They prevented tour operators from actively soliciting sales from residents of countries that were not allocated to them. And they also prevented tour operators from responding to requests for hotel reservations from consumers residing outside these countries. The Commission thus concluded that Meliá’s agreements violated Article 101 TFEU because they partitioned the EU single market.
The Commission reduced Meliá’s fine by 30% for cooperation. To earn this discount, Meliá expressly acknowledged the facts and its infringement of EU competition rules. It also cooperated by providing evidence. This is the twelfth fine reduction since 2016 under the Commission’s informal framework for rewarding cooperation in non-cartel cases.
Partitioning the EU Single Market – a European theory of harm
The Commission’s case focuses on an allegation that Meliá violated Article 101 TFEU by partitioning the EU single market through vertical restrictions on active and passive sales by tour operators of Meliá’s hotel rooms to consumers in other Member States. Melia’s agreements prevented customers from booking hotel rooms through tour operators in other Member States. They deprived customers from viewing full hotel availability, or reserving hotel rooms at lower prices with tour operators elsewhere.
Two factors motivate the Commission’s scrutiny of these types of vertical restraints. First, from an economic perspective, territorial restrictions may reduce brand price competition for Meliá’s hotel rooms across tour operators. If tour operator A knows that a customer in its allocated member state cannot obtain the same room from tour operator B, tour operator A does not need to compete with tour operator B on price. Secondly, from a policy perspective, these restrictions impede the operation of the single market, as they create barriers to trade across Member States. A customer in one Member State cannot access the same hotel rooms at the same price as a customer in another Member State.
These factors have led to a line of cases relating to territorial restrictions. Meliá is the eighth recent Commission decision fining companies for partitioning the EU single market; many of which are the result of the e-commerce sector inquiry. In the last two years alone, that inquiry has led to decisions implicating six companies for blocking orders from retailers who sold cross-border, restricting retailers from online advertising and cross-border sales, and restricting cross-border sales of merchandising products. The Commission’s fines in cases resulting from its e-commerce sector inquiry now total €191 million.
Reducing fines for cooperating in non-cartel cases
A second notable feature of this case is the 30% fine reduction Meliá received for non-cartel cooperation. This reduction continues a recent trend of rewarding cooperation in antitrust cases that do not qualify for the cartel leniency or settlement procedures.
Beyond the well-established framework for rewarding cooperation by companies in cartel cases, there is no formal framework at EU-level for enabling or rewarding cooperation in other types of cases—the Commission is creatively filling the gap. Since the ARA decision in 2016, the Commission has been trading fine reductions for cooperation within an informal framework modelled on the cartel settlement procedure.
In a factsheet published following its Guess decision in December 2018 to explain its cooperation framework, the Commission explained that it targets instances where “companies are willing to acknowledge their liability for an infringement (including the facts and their legal qualification),” as well as providing evidence or offering remedies. Determining the level of fine reduction to reward an acknowledgement of liability, as with the cartel settlement process “will be based on an overall assessment of the extent and timing of the cooperation given and the procedural efficiencies gained in each individual case.”
The Commission’s recent interest in rewarding cooperating companies, initially articulated by Commissioner Vestager in February 2016, presents potential benefits for both the Commission and companies. It enables the Commission to achieve procedural efficiencies and more effective enforcement through faster adoption of prohibition decisions, less burdensome evidence gathering, and on occasion, better targeted remedies in prohibition decisions. For defendants, it offers the possibility of a significant fine reduction and swift resolution of antitrust investigations that can otherwise be long drawn.
The cooperation framework does, however, raise concerns about due process. Defendants do not benefit from the formal procedural guarantees of the cartel settlement procedure. The criteria for determining fine reductions remains vague. Moreover, as the cooperation process significantly reduces the prospect and reality of judicial review, it removes one of the sources for clarity and refinement as to the contours of dominant companies’ “special responsibilities” under Article 102.
Defendants considering the Commission’s invitation to cooperate will have to make their own cost/benefit assessment of this novel use of Point 37 of the Fining Guidelines. At a basic level, the trade-off is between the extent of the available fine reduction and the swift resolution of the investigation on the one hand and foregoing the ability to appeal the decision on the other. So far, the trade-off appears to have been considered rather favorably: 12 companies have embraced the Commission’s offer. They are listed in the table below.
Table 1: Commission Decisions Reducing Fines For Cooperation In Antitrust Cases
|Decision (Date)||Cooperation Beyond
Feb. 21, 2020
|Evidence||Before SO||€6.7 M||-30%|
Jan. 30, 2020
|Evidence||Before SO||€14.3 M||-30%|
July 9, 2019
|Evidence||Before SO||€6.2 M||-40%|
May 13, 2019
|After SO||€200.4 M||-15%|
March 25, 2019
|Evidence||Before SO||€12.5 M||-40%|
Jan. 22, 2019
|After SO||€570.6 M||-10%|
Dec. 17, 2018
|Evidence||Before SO||€39.8 M||-50%|
July 24, 2018
|Evidence||Before SO||€63.5 M||-40%|
|Denon & Marantz
July 24, 2018
|Evidence||Before SO||€7.7 M||-40%|
July 24, 2018
|Evidence||Before SO||€29.8 M||-40%|
July 24, 2018
|Evidence||Before SO||€10.2 M||-50%|
Sep. 20, 2016
|Structural remedy||After SO||€6 M||-30%|
 Meliá (Holiday Pricing) (Case COMP/AT.40528), Commission decision of February 21, 2020, decision not yet published. Meliá owns over 350 hotels in 40 countries under brands such as Meliá, Gran Meliá, Paradisus, Sol Hotels, and Club Meliá.
 See Commission Press Release IP/17/201, “Antitrust: Commission opens three investigations into suspected anticompetitive practices in e-commerce,” February 2, 2017. See also Final Report on the E-commerce Sector Inquiry, COM/2017/0229, May 10, 2017; and Commission Sector Inquiry into E-commerce, available at: https://ec.europa.eu/competition/antitrust/sector_inquiries_e_commerce.html.
 Kuoni, REWE, Thomas Cook, and TUI. The Commission is not further pursuing an investigation against the tour operators.
 Active sales are sales achieved from actively approaching customers in other Member States. Passive sales are sales achieved by responding to unsolicited requests from customers in other Member States.
 Pioneer (vertical restraints) (Case COMP/AT.40182), Commission decision of July 24, 2018.
 Guess (Case COMP/AT.40428), Commission decision of December 17, 2018.
 Ancillary sports merchandise (Case COMP/AT.40436), Commission decision of March 25, 2019; Character merchandise (Case COMP/AT.40432), Commission decision of July 9, 2019; and Film merchandise (Case COMP/AT.40433), Commission decision of January 30, 2020.
 Fine reductions for cooperation in cartel cases can be twofold: through immunity or leniency (if a company provides self-incriminating evidence), and through settlement (if a company admits the infringement and agrees to follow a more streamlined and shorter procedure).
 ARA Foreclosure (Case COMP/AT. 39759), Commission decision of September 20, 2016.
 See Commission Factsheet, “Cooperation – FAQ,” December 17, 2018, available at: https://ec.europa.eu/competition/publications/data/factsheet_guess.pdf.
 Margrethe Vestager, Setting Priorities In Antitrust, Speech to the 11th Annual Conference of the Global Competition Law Centre, February 1, 2016, available at: https://ec.europa.eu/commission/2014-2019/vestager/announcements/setting-priorities-antitrust_en.
 The swift resolution of the proceedings can be a double-edged sword. It frees up resources and avoids a protracted cycle of negative publicity but will also accelerate potential follow-on litigation.