Examination of a price parity clause – Bundeskartellamt terminates proceeding against Lieferando

The Bundeskartellamt has decided for discretionary reasons to terminate its proceeding against Yd. Yourdelivery GmbH, a Berlin-based platform providing online food ordering services, for the time being. In Germany, the platform operates under the name Lieferando. The proceeding was initiated to examine a price parity clause in Lieferando’s general terms and conditions with restaurants. Based on this clause the prices charged on the Lieferando platform must correspond to the prices charged through the restaurants’ own distribution channels.

Andreas Mundt, President of the Bundeskartellamt: “In Germany, Lieferando is the heavyweight among the food delivery services, and it is suspected that the price parity clause significantly impedes restaurants. The clause could possibly reduce incentives to use other intermediary platforms at more favourable conditions. Our prohibition of a similar clause used by the online hotel platform Booking.com has been confirmed by the court of the highest instance, the Federal Court of Justice. However, the conditions in the food delivery market currently differ from the conditions for hotel booking platforms in the Booking.com case: The market and the business models for ordering meals are currently very much in motion. According to our current investigations, restaurants are increasingly using alternative services which newly enter the market, and sometimes they are using several delivery services in parallel.  Overall, we do not have sufficient indications at this point to suggest that the clause represents a serious barrier to market entry by new platforms offering differentiated services.”

In the course of its proceeding the Bundeskartellamt has carried out investigations among competitors and restaurant associations to be able to better assess the effect of the clause in view of Lieferando’s paramount market position in Germany. One essential result is that competition in the provision of intermediary services for meal orders is not only determined by the prices charged, but also, and in particular, by the differentiation of platforms and services. In this respect, the market is fairly dynamic as new entrants are offering restaurants alternatives to choose from. It is currently difficult to forecast the future market developments in Germany following the pandemic in the course of which delivery services have profited from changes in consumer behaviour.

Terminating the proceeding for discretionary reasons does not represent a statement on whether the price parity clause under review is permissible under competition law. The Bundeskartellamt will continue to monitor how consumer demand behaviour and competitive processes evolve, particularly now that Uber Eats and Wolt have entered the market. The Bundeskartellamt can anytime at a later date re-examine the conditions of competition and the contractual provisions if market developments suggest that the authority should do so or if further, substantiated complaints are received.

Furthermore, the Bundeskartellamt has taken a critical view of Lieferando’s practice to set up restaurant websites (so-called “shadow websites”) to the extent that this practice causes consumers to use Lieferando’s intermediary services unintentionally. However, the authority has not found any substantial proof of a pull effect caused by the combination of a price parity clause and “shadow websites”, an effect the practice was feared to produce to the benefit of the market leader. This does not represent any statement as to the relevance of the clause under consumer protection law. In conclusion, the Bundeskartellamt wishes to point out that restaurants can refrain from having Lieferando set up their websites or object to this practice.

Background

Price parity clauses often only appear to be of benefit to consumers. As they prevent better prices from being offered by alternative distribution channels, such clauses can have negative effects on competition between competing providers of online intermediary services and, depending on the conditions of competition in the markets affected, they can impede market entry by new platform services. Especially in concentrated markets, price parity clauses are thus subject to special attention under competition law.

From 2013 to 2015, the Bundeskartellamt addressed and prohibited price parity clauses in the e-commerce and online hotel platforms sectors. In several proceedings, the Bundeskartellamt’s prohibition of the clauses was confirmed by the courts (the Düsseldorf Higher Regional Court in the HRS case and the Federal Court of Justice in the Booking.com case).