LONDON: The British Office of Fair Trading is investigating some of the world's biggest online travel companies who are accused of overcharging holidaymakers for hotel rooms in a price-fixing scandal.
The consumer regulator said on Tuesday, it was poised to make a finding against several online travel companies and hotel chains for conspiring to fix the cost of rooms after an investigation by the Telegraph in London.
Hotels were effectively banned from selling rooms cheaply, with the global online travel agents setting a minimum price so they were not undercut, calling it price "parity". Hotels refusing to use the minimum price were threatened with removal from the sites, leaving them reluctant to offer rooms at a cheaper rate through smaller companies.
Expedia, one of the world's biggest online travel firms, has admitted it "engaged in cartel conduct in breach of the law". It is co-operating fully with the investigation and is understood to be providing information on its rivals under a "leniency deal".
Fair Trading can fine companies up to 10 per cent of annual global turnover. It is focusing its investigation on firms including Booking.com and InterContinental Hotels.
The regulator said its provisional view was that several firms had breached competition law, and served the companies with so-called "statement of objections" notices.
The chief executive of Fair Trading, Clive Maxwell, was awaiting the firms' responses to the notices. "We want people to benefit fully from being able to shop around online and get a better deal," he said.
The case could allow tourists to seek compensation.
A small retailer blew the whistle on the practice, claiming that hotels insisted all internet suppliers marketed rooms at the same price, because the big travel agents insisted on the price "parity".
Documents from the investigation purport to show hotel chains such as Radisson and Starwood ordered agents not to offer web discounts. An email to a website from a Radisson executive showed how the hotels tried to enforce the "parity" rate. "Please REMOVE all Radisson Edwardian Hotel products from your site as you are causing us online rate parity issues," wrote Gail Jordan, a sales director.
The complaint came from Dorian Harris, who runs the online travel firm Skoosh. He said: "These companies are only able to confidently guarantee the best rates because they've precluded the competition from discounting with legal threats."