Reuters: Regulatory News: UPDATE 3-Watchdog alleges online hotel tie-ups broke law

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UPDATE 3-Watchdog alleges online hotel tie-ups broke law Jul 31st 2012, 13:47 Tue Jul 31, 2012 9:47am EDT * OFT says deals infringe competition law * Focus on InterContinental, Booking.com and Expedia * Companies have three months to respond * InterContinental shares down 0.8 percent LONDON, July 31 (Reuters) - Britain's consumer watchdog has alleged that InterContinental Hotels Group and two leading online travel agents broke competition law by signing deals that limited the discounts offered on hotel rooms. The Office of Fair Trading (OFT) said on Tuesday that InterContinental's deals with Booking.com and Expedia could limit price competition and create barriers for new entrants to the market by discouraging online agents from using sales commission to reduce prices for customers. In a Statement of Objections resulting from an investigation started in 2010, the watchdog said that its provisional view was that the hotelier and the two agents had infringed competition law with practices that were potentially widespread in the industry. The deal between InterContinental and Booking.com is still in place, the OFT said. Expedia's alleged infringement occurred between October 2007 and September 2010. The OFT's investigation was in response to a complaint by a small hotel-booking website, Skoosh.com, which claimed that various hotel chains were preventing it from offering discounted prices on room-only accommodation. "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," OFT Chief Executive Clive Maxwell said in a statement. "The OFT's provisional view is that Booking.com, Expedia and InterContinental Hotels Group have infringed competition law," he added. Hotel groups sell their rooms direct to customers via their own websites, but also use online agents to keep occupancy levels high. The OFT said that UK hotel bookings through online agents totalled about 849 million pounds ($1.33 billion) in 2010. British-based InterContinental countered that it considered 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. It said that it is cooperating fully with the OFT's investigation. The group, which runs more than 4,500 hotels across under brands such as Holiday Inn, Crowne Plaza and InterContinental, emphasised that these were only provisional findings and added that it had commercial arrangements with more than 200 online agents across the world. The OFT said that all parties now have three months to respond before it makes a final decision on whether competition law has been infringed. InterContinental shares were down 0.8 percent at 1,584 pence by 1205 GMT in a largely flat UK stock market. Link this Share this Digg this Email Reprints

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