Booking.com, Expedia and InterContinental Hotels Group face a competition probe over the online supply of hotel rooms.
The Office of Fair Trading today claimed the three companies have infringed competition law in relation to the online supply of room-only hotel accommodation by online travel agents.
The OFT alleges that Booking.com and Expedia each entered into separate arrangements with the world’s largest hotel group IHG which restricted an online travel agent’s ability to discount the price of room-only hotel accommodation.
The OFT said it “considers 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 formal investigation was initiated in September 2010, following a complaint submitted by a small online travel agent, alleging that it was being prevented by various hotel chains from offering discounted sale prices for room-only accommodation.
The OFT said it limited the scope of its investigation to a small number of major companies, “with a view to achieving a swift and effective outcome”.
The probe assessed the alleged practices from January 2007 onwards.
“However, the investigation is likely to have wider implications as the alleged practices are potentially widespread in the industry,” the OFT warned.
OFT chief executive Clive Maxwell said: “We want people to benefit fully from being able to shop around online and get a better deal from discounters that are prepared to share their commission with customers.
“The OFT’s provisional view is that Booking.com, Expedia and InterContinental Hotels Group have infringed competition law.
“However, these are the OFT’s provisional findings only. All parties will now have a full opportunity to respond to our Statement of Objections before we decide whether competition law has in fact been infringed.”
IHG responded with a statement saying: “IHG considers its arrangements with the online booking agents to be compliant with competition laws and consistent with the long-standing approach of the global hotel industry.”
The company said it was fully co-operating fully with the OFT’s investigation.