Office of Fair Trading accuses IHG, Expedia and of limiting price competition

31 July 2012 by
Office of Fair Trading accuses IHG, Expedia and of limiting price competition

Hotel giant InterContinental Hotels Group could be subject to a fine of up to 10% of its global turnover should it be found guilty of limiting price competition on online hotel sales, following an allegation from the Office of Fair Trading (OFT) this morning.

The OFT has named IHG alongside online booking websites and Expedia in an official "Statement of Objections", alleging that the trio broke competition law in relation to the online supply of hotel accommodation. However, there is no proof so far that any of the three firms did anything wrong.

In the statement, the OFT accused and Expedia of each entering into separate arrangements with IHG that restricted the online travel agents' ability to discount the price of room-only hotel accommodation.

"The OFT 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 OFT said.

The investigation into the alleged price restrictions comes after a complaint in 2010 by smaller online travel agent that hotels threatened it with legal action because it was discounting rooms, rather than offering prices in line with "rate parity".

The OFT said it had assessed the alleged practices from January 2007 onwards and proposed to find that the alleged infringement involving Expedia, IHG and InterContinental London (ICL) lasted from 17 October 2007 to 21 September 2010 and that the alleged infringement involving, IHG and ICL lasted from 1 January 2007 and is ongoing.

The companies involved have three months to respond to the Statement of Objections, the full version of which will not be published. If the OFT decides that competition law has been infringed, then two of the three - IHG and - could face a fine of up to 10% of their global annual turnover, although usually fines in such cases are significantly lower than this.

Expedia, which is currently co-operating with the OFT under what is called "conditional immunity" will not face fines should it be found to have infringed the law, so long as it continues to work with the regulator.

Clive Maxwell, OFT chief executive, 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, 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."

In a statement, IHG said: "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. IHG is cooperating fully with the OFT's investigation, which commenced in 2010.

"The Statement of Objections is the OFT's provisional findings only. All parties will now have the opportunity to respond to the statement before the OFT decides if competition law has in fact been infringed."

OFT probes online hotel booking price fixing claims >>

By Neil Gerrard

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