Lords call for ‘urgent' market investigation into OTAs

21 April 2016 by
Lords call for ‘urgent' market investigation into OTAs

A House of Lords select committee has called for an urgent market investigation by the Competition and Markets Authority (CMA) into the online travel agent sector.

The call comes as part of a report, published yesterday by the European Union Committe, entitled Online Platforms and the Digital Single Market.

It concluded that "the increasing use of restrictive pricing practices by online platforms requires critical scrutiny by competition agencies. While some restraints may be justified to enable price comparison websites to operate, these clauses may also, especially when broadly designed, enable firms to exploit suppliers and exclude competitors. A case by case analysis by competition authorities is therefore necessary."

It went on to say: "We recommend that the Competition and Markets Authority urgently order a market investigation into the online travel agent sector. This investigation should consider the extent to which banning wide parity clauses has been effective, claims that online travel agents continue to prevent suppliers from offering other online travel agents a lower price, and other misleading practices alleged against online travel agents, including the creation of ‘shell websites'."

And it recommended that as a Europe-wide issue, the European Commission support the investigation and co-ordinate any related activity by other National Competition Authorities.

Ufi Ibrahim, chief executive of the British Hospitality Association (BHA), welcomed the report.

She said: "These OTAs wield vast power and hold our industry hostage by commanding punitive rates of commission. We are pleased that this influential committee is proposing Europe wide steps to enable our industry to challenge anti-competitive online practices when they arise.

The British Hospitality Association has previously called for:

•an outright ban on rate parity clauses - which prevent hotels from offering lower rates than those on the online booking sites where they are listed, claiming the practice impacts directly on consumers since it means less competitive pricing with similar room rates offered by online travel agencies and hospitality venues across the board. Rate parity clauses are already illegal in France and were found to be anti- competitive in cases brought against Booking.com and HRS in Germany;

•more effective and speedier methods for resolving competition and consumer protection issues and codes of practice for online platforms;

•transparency for consumers in rankings, ratings, reviews.

However, the hospitality industry must now wait to see whether the Competition and Markets Authority adopts the report's recommendations.

Hospitality industry lobbies Parliament >>

France bans rate parity >>

BHA slams OTAs for ‘stifling competition' when booking hotels >>

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