Bulgaria: CPC deems minimum hotel accommodation prices anti-competitive
The Ministry of Tourism recently proposed introducing minimum prices for sites categorized as accommodation places. In Decision 529/10.05.2018, the Commission for Protection of Competition (CPC) evaluated the proposal’s alignment with competition regulations.
CPC’s Position on Price Competition
The CPC determined that establishing minimum prices for accommodation would restrict price competition among hotels. According to the commission, minimum prices cannot ensure either “the quality of a site or its compliance with the category ‘hotels’” or guarantee that hoteliers would reinvest profits into service improvements.
Market Dynamics and Pricing Factors
The CPC noted that accommodation pricing depends on numerous variables beyond category designation, making it impractical to establish a single minimum price applicable across all scenarios. Instead, prices should reflect natural market mechanisms responding to supply and demand relationships. Ministry data demonstrated declining accommodation capacity and room oversupply.
Competition and Consumer Benefits
The commission argued that effective competition drives efficiency rather than sustaining underperforming market participants. Competition objectives include stimulating quality service provision at lower prices. Minimum prices would likely reduce tourist inflow and hotel revenues—contradicting competition goals.
Alternative Solutions
The CPC concluded that minimum pricing achieves no regulatory objectives and identified alternative mechanisms. Quality assurance through category compliance verification provides a better approach. Additionally, the Unified Tourist Information System would enable real-time data sharing among the Ministry of Tourism, National Revenue Agency, Ministry of Interior, municipalities, and hotel operations.