Expedia, Booking.com and InterContinential Hotels Group may have broken EU competition law by restricting the ability of travel agents to discount the prices of room-only hotel accommodation, thereby squeezing out their competition.
That’s according to an Office of Fair Trading statement of objections issued Tuesday that follows an OFT investigation opened in September 2010 into suspected breaches of competition law in the hotel online booking sector.
The OFT's finding’s are provisional and the websites and hotel chain have the opportunity to respond before the department delivers a final verdict.
In a statement, OFT chief executive Clive Maxwell said: “The OFT's provisional view is that Booking.com, Expedia and InterContinental Hotels Group have infringed competition law.”
The 2010 investigation was initiated following a complaint by Skoosh.com.
Skoosh had claimed the 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 said 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.
The department claimed the value for UK hotel rooms amounted to approximately £10.1bn in revenue in 2010.