FRANKFURT (Reuters) - Germany's antitrust regulator has ordered that online travel agent Booking.com must scrap a practice that forbids hotels from offering rooms at lower prices on their own websites.
So-called parity clauses in contracts between online booking sites and hotels are common in the industry and have led to complaints by rivals and scrutiny by regulators across Europe.
The practice allows online travel agents such as Booking.com, part of U.S.-based Priceline Group, to claim that they always offer the cheapest online rates available.
Germany's Federal Cartel Office said the clause violates fair competition rules.
In a concession to regulators, Booking.com eased its policy in December 2014, allowing hotels to offer lower prices on rival portals but not on their own websites. The cartel office said that this was still illegal.
"These so-called narrow best-price clauses still limit competition between existing portals as well as competition between the hotels," Andreas Mundt, the cartel office's president, said in a statement on Wednesday.
"The incentive for a hotel to reduce its prices on a hotel portal is very low when it has to charge higher prices on its own website at the same time," Mundt added.
Booking.com will have to scrap the clauses by Jan. 31, the watchdog said.
The regulator said that its investigation into similar practises at rival Expedia was ongoing. A German court also backed a competition authority's decision that such clauses at HRS were illegal.
Booking.com said it would appeal the decision and will change its policies in Germany until a final ruling has been made.
(Reporting by Harro ten Wolde, editing by Louise Heavens)