Websites may evade cartel probe over hotels deal

Local | Sophie Hui 1 Apr 2020

Three major booking websites could be in breach of the competition law by forming a de facto cartel to ensure other booking platforms would not get lower prices from hotels.

Under the clauses signed between the three online travel agents – Booking.com, Expedia.com, and Trip.com – and hotels, accommodation providers in Hong Kong are asked to give the three the same or better terms as those offered in all other sales channels, including for room prices, conditions, and availability.

The Competition Commission said these clauses may potentially undermine competition among online travel agents.

But the three websites have promised to delete the clauses, it said yesterday, meaning the commission may drop its investigation into the suspected cartel, depending on results from a public consultation exercise.

“The proposed commitments aim to address the commission’s concerns over certain clauses in the online travel agents’ agreements with accommodation providers in Hong Kong that may harm competition, potentially in contravention of the first conduct rule of the ordinance,” it said. Under the rule, businesses are prohibited from making agreements if the object or effect is to harm competition.

The watchdog said the clauses between three websites and accommodation providers may also hinder the entry and expansion of new or smaller online travel agents.

After removing those clauses, consumers may be open to more competition and greater variation on the market, potentially seeing room prices for the same hotel varying on different booking websites.

For accommodation providers, the watchdog said they will have more bargaining power when negotiating with online agents.

“Without the parity restrictions, accommodation providers could offer better rates or conditions or room availability to particular online travel agents in return for a lower commission.

This may, in turn, improve rates, conditions and/or room availability to the benefit of consumers,” it continued.

Removing those clauses may also benefit newcomers as they can accept a lower commission from accommodation providers in return for better rates, conditions or room availability than competitors, while consumers would benefit from more new online travel agents in the market, the commission added.

It found the commitments by the three websites appropriate and therefore proposed to accept them. But it will consult the public before making decisions, and people can submit opinions to the watchdog by April 14.

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