OTA sector set for competition investigation

OTA sector set for competition investigation

The UK competition watchdog is one of ten regulators across the European Union to start monitoring the online hotel booking sector.

The move follows Expedia and Booking.com changing their terms and conditions last July to remove certain ‘rate parity’ or ‘most-favoured nation’ requirements.

This prevented hotels from offering cheaper room rates on competing online travel agents’ sites than are offered on Expedia and Booking.com, according to the Competition and Markets Authority.

The joint monitoring work, which is expected to be completed by the end of the year, will enable the CMA to determine whether or not there is a need for any further action in the sector.

The CMA closed a long-running probe into discounting restrictions in September on “administrative priority grounds” but committed itself to keeping a watch on developments.

Hotels across the UK are now being sent a questionnaire by the CMA as it monitors how changes to room pricing terms are affecting the market.

The monitoring project has been started by the authority in conjunction with the European Commission and nine other competition agencies in the EU including Ireland, France and Germany.

The questionnaires, which use a common approach across the 10 countries, will collect information to assess how that change, alongside other recent developments – including several investigations across Europe into a range of pricing practices in the online booking sector – have affected the market.

CMA senior director for antitrust, Ann Pope, said: “Consumers benefit from lower prices and better service in a truly competitive market in which hotels and online travel agents compete for their business.

“The CMA is aware of concerns raised by a number of hotels about how this market is operating.

“This project is part of the CMA’s ongoing commitment to watch this market closely in order to ensure that consumers are benefitting from effective competition and we welcome responses to this survey, so that we can see how the market is developing in light of recent changes.”

A deadline for August has been set for views to be submitted.

Expedia said in a statement, “Expedia understands that a number of competition authorities in Europe started sending questionnaires to hotels across Europe to better understand how hotels market their rooms and use intermediaries, such as Expedia and others. Expedia understands that online travel booking platforms and price comparison sites will also be approached as part of this assessment.

“The assessment follows amendments made last year, by a number of online travel agencies (OTAs) (including Expedia), to certain terms of their contracts with hotels in Europe. These changes resulted in most European competition authorities concluding their investigations into Expedia. The recently launched assessment aims to provide further insights into market developments following these changes.

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