It seems the UK Office of Fair Trading (OFT) occasionally does it job, with them releasing a statement today where they looked at Expedia, Booking.com and InterContinential Hotels Group, and found them possibly breaking European Competition Law in regards to room-only hotel accommodation,and trying squeezing out their competition.
The OFT’s findings are provisional at this point, and all parties have the chance to respond a final verdict is delivered.
However the provisional view is a damning one from the OFT:
“The OFT’s provisional view is that Booking.com, Expedia and InterContinental Hotels Group have infringed competition law.”
The investigation started in 2010 started when Skoosh.com claimed that hotels it bought room bookings from were under pressure from other resellers to maintain minimum prices – a practice it said was called ‘rate parity’ among industry insiders. This meant no discounting, empty rooms and no price competition.
The OFT has stated that the alleged infringements are – by their nature – anti-competitive in that they could limit price competition between online travel agents and increase barriers to entry and expansion for online travel agents that may seek to gain market share by offering discounts to consumers.
Expedia and IHG argue that complied with the law.
Expedia states:
“Expedia remains committed to ensuring that it provides consumers with the widest possible choice of travel options at competitive prices and will seek to safeguard its ability to continue to do so in relation to the current regulatory process”
ICGH said its arrangements with
“compliant with competition laws and consistent with the long-standing approach of the global hotel industry”.
The OFT argues that the arrangement between Booking.com and IHG was still in place, while Expedia allegedly violated rules between October 2007 and September 2010, the OFT added.
The impact of this is going to be one to watch – certainly, I don’t expect hotel operators who have such agreements to be too keen on loosing them, allowing smaller parties to snipe cheaper rooms for customers.