Online hotel competition inquiry closed due to ‘not being a priority’

The Competition and Markets Authority has closed a probe into suspected breaches of competition law in the hotel online booking sector.

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The Competition and Markets Authority has closed a probe into suspected breaches of competition law in the hotel online booking sector.

However, the competition watchdog pledged to keep a close watch on the industry.

The investigation focused on restrictions in agreements between InterContinental Hotels Group, Hotel InterContinental London, Booking.com and Expedia, which prevented the online travel agents from discounting the price of rooms.

It was one of several investigations across Europe into a range of pricing practices in the online booking sector.

The CMA’s predecessor, the Office of Fair Trading issued a provisional decision in 2012 and accepted formal commitments from IHG, Booking.com and Expedia in January 2014.

The Competition Appeal Tribunal sent the case back to the CMA for reconsideration last September following an appeal in respect of a commitments decision by Skyscanner.

The CMA said: “Having reconsidered the matter in the light of the CAT’s judgment and following a fresh look at the case, the CMA has decided to close the investigation into discounting restrictions on administrative priority grounds.

“It will maintain a careful watch on how the market develops both in the UK and across Europe and will continue to liaise closely with fellow national competition authorities and the European Commission.

“The CMA’s continued monitoring will include observing the effects of recent Europe-wide changes introduced by Booking.com and Expedia.

“These changes remove from their contracts with hotels certain ‘rate parity’ or ‘most-favoured-nation’ restrictions that prevent hotels from offering cheaper room rates on competing online travel agents’ sites than they offer on Booking.com or Expedia.”

The new arrangements allow hotels across Europe to offer cheaper rates than on Booking.com or Expedia through other online travel agents, offline, and to certain groups of customers. Rate parity continues in relation to prices offered on hotels’ own websites and certain other direct sales channels, according to the CMA

Ann Pope, anti-trust senior director at the CMA, said: “This is a sensible point for us to take stock and refocus our activity in this important sector.

“It is too soon to tell whether or not the changes made by Booking.com and Expedia will materially change how hotel rooms are priced on the internet.

“We will continue to watch this closely and welcome views about how the market is developing in light of these changes.

“Vertical restraints in online markets, where a business imposes pricing or certain other restrictions on another business operating at a different level of the supply chain, remain a serious concern for the CMA where they result in consumers losing out.

“As always, we will give serious consideration to taking enforcement action in any sector where we suspect a breach of competition law which gives rise to consumer harm.”