In an important judgment before the Competition Appeal Tribunal, the commitments negotiated between Expedia, IHG and the OFT were struck down for the failure of the OFT to follow due process in considering the effects of the commitments on third party meta-search site, Skyscanner. This ruling will have widespread ramifications for the hotel and travel industry dealing with price parity issues on the one hand and on the other, the CMA (the new UK super competition watchdog) in how it negotiates Commitments in competition cases in the future.
In April we reported how Skyscanner had appealed against commitments given by Expedia and others to the then OFT regarding the advertised prices of hotel rooms. In short, it could only advertise some discounted rates to closed groups of previous users and not the public as a whole. Skyscanner (which was not party to the commitments and not under any scrutiny itself) asked the Competition Appeals Tribunal (CAT) to judicially review the commitments on the basis that it was an affected party. Skyscanner’s argument was that as a meta-search site (a reporter and collator of pricing information), its business was hampered by the OFT deal as sites such as Expedia and the hotel group IGH feature in Skyscanner’s results.
Therefore Skyscanner asserted that the OFT had failed to act in due process by considering Skyscanner’s arguments on the effect of the commitments to the wider hotel industry.
It is against this background that on 26th September 2014, the CAT considered Skyscanner’s pleas and held them correct. The OFT had acted without due process and had not treated Skyscanner fairly. It had done so by not investigating Skyscanner’s claims on the effect of the commitments and had asked for unreasonable evidence from Skyscanner to back up their assertions.
The appeal did not consider the effect of price parity or most favoured nation clauses, these being competition law issues that have dogged the industry and seem to be much under European regulator’s microscopes for the time being.
The CMA as the OFT’s predecessor will now have to rethink the exact approach of the commitments they enjoy with Expedia and others.
The CAT’s decision can be found here.