REPORT FROM ENGLAND—The United Kingdom’s Office of Fair Trading has closed its case on rate parity across Europe, allowing suppliers and third-party intermediaries to continue to offer discounted rates to “fenced” groups.
In the investigation into Booking.com, Expedia Inc. and InterContinental Hotels Group, the OFT has accepted commitments from the companies that hotel managers who deal with these three businesses will only offer discounts to travelers who have signed up for a membership or have made a previous undiscounted booking with the online travel agent or supplier in question.
The discounts offered by OTAs “will be funded through their commission or margins,” according to an OFT statement.
Suppliers and third parties have been offering discounts within parity agreements to “fenced” users—loyalty members, for example—for a number of years. Mobile is considered another fence, and there are a handful of distributors using mobile-only discounting strategies. For companies like HotelTonight, users are determined to be in a fence because they specifically download the app.
The OFT's investigation centered on competition concerns, suggesting specifically that Booking.com and Expedia had each entered into separate agreements with IHG that restricted the ability to discount rates, according to the OFT’s statement, released Friday.
“The commitments address these concerns by allowing greater competition on price between OTAs, and also between OTAs and hotels,” according to the statement. “They should also enable new online agents to enter the market or expand by offering attractive discounts.”
The formal investigation began in September 2010. In July 2012, the OFT alleged that the two OTAs and IHG “infringed UK and EU competition law in relation to the online offering of room only hotel accommodation bookings by OTAs.”
Dorian Harris, founder of Skoosh, brought the case to the OFT in 2010 because he felt Skoosh was unable to compete due to rate parity agreements that limited his ability to take lower commissions and discount rooms effectively. Harris said the ruling doesn’t change his opinion.
“I’m baffled by the outcome of this case. It appears to pander to the spurious concerns of the major players at the expense of the rest of the hotel industry,” he said. “My hope is that the other European authorities will take their lead from the Germans, who have categorically outlawed this type of industrial bullying.”
Other legal rate parity disagreements continue across the globe, including in Germany, Scandinavia and the United States.
Neither IHG, Expedia nor Priceline Group, parent company of Booking.com, responded to requests for comment by press time.