Online travel agents and hotel group broke competition law, OFT claims

Two online travel firms and a hotel group have been accused of infringing competition law by limiting hotel room discounts.

The UK’s Office of Fair Trading (OFT) issued a Statement of Objections today, alleging that Expedia and entered into separate arrangements with Intercontinental Hotels Group which restricted the online travel agents’ ability to discount the price of room-only hotel accommodation.

An investigation was first launched by the OFT in September 2010, after a small online travel agent lodged a complaint alleging that it was being prevented by various hotel chains from offering discounted sale prices for room-only hotel accommodation.

In order to achieve a swift and effective outcome the competition watchdog limited the scope of its investigation to a small number of major companies. However, it says that the investigation is likely to have wider implications because the alleged practices are potentially widespread in the industry.

The OFT believes that the alleged infringements are anti-competitive because they could limit price competition between online travel agents.

“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,” said OFT chief executive Clive Maxwell., Expedia and InterContinental Hotels Group will now have the opportunity to respond to the OFT’s Statement of Objections before the regulator makes a final decision on whether competition law has been infringed.

The UK’s online travel agency sector is the largest in Europe. UK hotel accommodation bookings made through online travel agents totalled approximately GBP849m in 2010.