OFT overturned in online travel discounting appeal

A company that seeks to enable travellers to find the best deals for flights, hotels and car hire around the world has succeeded in challenging a decision by the former Office of Fair Trading regarding anti-competitive practices engaged in by online hotel companies.

In what is said to be the first successful appeal of its type, Skyscanner challenged the adequacy of commitments by the hotel companies to remove discounting restrictions for online travel agents. These concerned so-called "price parity clauses" – arrangements where neither sellers nor resellers discount from the headline price because of pricing mechanisms that mean that competitors’ prices will also drop.

The appeal was taken on the basis that the OFT's decision reduced price transparency and introduced new restrictions on the advertising of available discounts for hotel rooms, leaving consumers disadvantaged. It would also have prevented any comparison, or "metasearch", sites like Skyscanner, from publishing the best available prices, as the discounts for closed group members, a key part of the commitments, were not available to be seen on these sites.

The OFT's successor, the Competition & Markets Authority, will now look again at the arrangements.

Catriona Munro, a partner at Maclay Murray & Spens, who acted for Skyscanner, commented: "The OFT had originally identified several competition concerns. Its decision to draw a line under the issue, by accepting undertakings from the key parties, was therefore not only baffling but fundamentally flawed." She described the appeal ruling by the Competition Appeal Tribunal as "highly significant and a welcome boost to consumers and the burgeoning metasearch industry".

Price parity clauses, she added, "exist in sectors other than hotels and could be found to be illegal".