PARIS—Online travel agent Booking.com will loosen controversial pricing and availability contracts with hotels in several European countries, settling complaints that the U.S. company has been stifling competition for hotel reservations.

Antitrust regulators in France, Italy and Sweden said Tuesday that they have accepted a package of concessions from Booking.com, a unit of U.S.-based Priceline Group Inc., to loosen contracts it holds with hotels to be listed on its popular online-hotel booking platform.

The deal includes several new concessions from Booking.com over its initial settlementproposal late last year, including the freedom for hotels to allot fewer rooms to Booking.com than to other platforms, and to offer cheaper rooms directly to consumers via offline channels, such as by phone. The agreement, which goes into effect on July 1, is backed by possible noncompliance fines of up to 5% of the company’s global revenue.

Tuesday’s Booking.com deal is the latest effort by European antitrust regulators to use the threat of heavy fines to rein in a new cadre of Internet companies—many from the U.S.—that have become powerful middlemen in other businesses, ranging from hotels to online advertising. The European Union last week filed formal charges against Google Inc. for allegedly abusing its dominant position in online search, after several failed attempts at a settlement.

While Tuesday’s deal applies only in France, Italy and Spain, it was coordinated with the EU, and the French authority said it hopes that the deal will be adopted in other European countries, as well as to other competitors in the space such as Expedia Inc.

“We aren’t going to stop here,” said Bruno Lasserre, head of France’s competition authority. “We are imposing a test model that can be replicated elsewhere.”

Priceline Group said it too hopes that the deal can serve as a template in Europe for competitors. “This is a milestone for how we approach the market everywhere in the world,” said Darren Huston, chief executive officer of Priceline Group. “It will set the tone.”

Expedia said Tuesday that it is in “constructive discussions” with antitrust regulators in France, Italy and Sweden and “hopes to achieve a resolution in the near future on terms which meet all parties’ objectives.”

The settlement follows years of wrangling between hotels and Booking.com over so-called parity clauses in their contracts with websites such as Booking.com. Hoteliers argue that the clauses strip them of their flexibility in their pricing strategies, by obliging hotels to offer Booking.com and other websites the same room price they offer elsewhere.

Hotels in Europe pay online travel agents between 10% and 30% commission on a room reserved via one of the sites, an amount they have complained is too high, given the rising number of rooms that are reserved via such portals.

In Booking.com’s initial settlement offer late last year, the company proposed softening the pricing-parity clause in its contracts to allow hotels to offer rooms at cheaper rates to other online travel agents. But in a comment period after the proposals were disclosed last year, hotels chafed at other restrictions that remained, leaving them unable to offer the rooms more cheaply themselves or to restrict the number of rooms they gave to Booking.com.

Under Tuesday’s deal, which was hammered out in recent months with input from the hotels, the French competition authority said, hoteliers have won most of what they were looking for. But they still will be unable to advertise lower prices than Booking.com on their own websites or in their mobile applications; to do so they must use individual mailings, phone calls or in-person reservations.

The French competition authority said that the restriction is justified because hotels benefit from advertising that companies such as Booking.com purchases online, allowing even tiny hotels to be visible on the Internet.

Source: http://www.wsj.com/articles/booking-com-settles-antitrust-complaints-1429623279