Office of Fair Trading launches investigation into alleged price fixing cartel in the online sale of hotel rooms
The Office of Fair Trading (“OFT”) has launched an investigation into an alleged price fixing cartel in the online sale of hotel rooms.
The investigation follows a complaint to the OFT from a discount hotel comparison website called Skoosh.com
Skoosh complained that hotels were putting it under pressure to offer rooms at a standard fixed price rather than leaving it free to set its own resale prices. In some cases, Skoosh claim that they were threatened with legal action, or threatened that they would not be sold hotel rooms if they did not comply.
Many hotels adopt a strategy of keeping their occupancy rates as high as possible at all times. While some hotel rooms are sold direct to a customer in the normal way, hotels also use online booking firms and sell any spare capacity through room wholesalers. These wholesalers often sell the rooms through travel agents, or they can offload them to discount websites such as Skoosh.
It is expected that the OFT’s investigation will focus on allegations that there may be agreements and concerted practices between hotel operators, room wholesalers and hotel booking websites which result in fixed or minimum resale prices, which is illegal under Chapter I of the Competition Act 1998.
If the OFT decides that there have been breaches of the Competition Act, it can impose substantial penalties of up to 10% of a firm’s worldwide gross annual turnover. Criminal penalties are also available for directors and senior officers of firms involved in price fixing.
Commenting in the investigation, Douglas McLachlan, an Associate in Biggart Baillie LLP’s Competition Team said:-
“This investigation is the latest in a string of new anti cartel investigations by the OFT. Fortunately the OFT operates a Leniency Programme offering full or partial immunity from fines and immunity from prosecution for those who confess their involvement in the cartel and co-operate with the OFT. The rate of reduction in the fine depends on how quick you are to come forward to ask for immunity. That’s a powerful incentive to anyone who might have something to confess to the OFT. If in doubt, contact a competition lawyer today.”
The information contained in this article is given for general information only, reflects the current law on the date of the article, and does not constitute legal advice on any specific matter