EU ANTITRUST: HOT TOPICS & NEXT STEPS

EU ANTITRUST: HOT TOPICS & NEXT STEPS 2022

Prague, Czechia

a distinction between commercial and tax law must first be determined. If the rental includes more than just asset management, but also a business operation, commercial law will usually apply. If there is a lot of economic activity and profit seeking, the rental is more likely to be a commercial enterprise. Because there is no clear distinction between commercial activity and pure asset management, each issue must be considered individually. 4.2 Reasons for regulating short term rentals Many of the limits imposed on lodging establishments are based on the number of beds available rather than the presence of a commercial activity. As a result, only short-term private apartment or room leases are currently subject to statutory restrictions. Any additional regulation, such as broadening the requirements for big hotel providers to include small private providers, would only be justified from an economic standpoint if there was a systematic market failure (Funta, 2014, pp. 69–93). State control of lodging facilities may be advised due to information asymmetry and to protect consumers or accommodation guests. This is especially true when it comes to safety and hygiene, which are difficult for guests to assess. In order to maintain a fair level of safety and hygiene, housing facilities must often meet minimal criteria. From the standpoint of competition policy, it should be underlined that an appropriate regulatory framework should, in theory, take into consideration the particular security concerns associated with each economic activity’s type and scope. A regulatory distinction between a major hotel facility and a (occasional) private overnight stay provider may be perfectly acceptable in this scenario. Smaller providers may have a financial advantage and, as a result, a competitive advantage due to less severe limitations, but this is not an excuse to apply the same safety rules. Rather, it is possible that this will create a market entry hurdle, reducing competition in the accommodation industry. At this moment, it is not possible to fully investigate whether current private accommodation safety laws are appropriate or should be strengthened. On the one hand, it is questionable that previously reasonable safety regulations for rented private housing have suddenly become insufficient, especially given that the flats in question may be suitable for long-term rental. On the other hand, it may be argued that more frequent short term private accommodation rentals pose security risks, thus requiring stricter security measures. In this case, specific criteria for lodgings with a small number of beds that are less extensive than those for big lodging providers but higher than the level for private flats may be considered. Increased safety regulations, for example, could be linked to the number of nights rented each year or the frequency with which they are rented. When it comes to renting private housing, market failure is most typically caused by knowledge disparities and adverse externalities. There may be information gaps between landlords and potential visitors when it comes to safety and sanitation issues. Minimum government regulations may be required

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