Skyscanner win: too little too late?
A British regulator has quashed a decision that would have removed certain discounting restrictions for OTAs and hotels, but what does it mean for the original complainant in the case against the big boys?
Last week, news broke that Skyscanner had won two of three grounds of an appeal against a decision last winter by Britain’s Office of Fair Trading (OFT). That decision would have allowed online travel agents (OTAs) and hotels to offer discounts to consumers, providing they had already made one full price booking, within closed user groups.
Skyscanner, supported by Skoosh (the original complainant in a 2012 antitrust investigation into hotel pricing), appealed the decision on three grounds. The first related to the allegedly binding nature of the decision on third parties and whether the OFT acted illegally, the second, the alleged failure to take into account relevant considerations and the third related to the ultra vires and/or irrational nature of the decision.
In essence, Skyscanner’s objection (one that has been echoed by other meta search companies) related to a belief that all consumers have the right to be able to compare prices accurately and have access to the cheapest possible rates – something that price comparison sites seek to achieve.
One of the major criticisms of the OFT’s ruling in January was that it had failed to take the time to properly investigate the objections of Skyscanner. And in its judgement, the Competition Appeal Tribunal (CAT) is clear that “the OFT failed properly to consider Skyscanner’s objection to the proposed commitments”. In fact the CAT even goes as far as to say that the OFT by failing to do so “acted as no reasonable authority should act”.
By quashing the OFT’s decision, the Competition & Markets Authority (which the OFT is now part of) will now have to revisit the decision arrived at in January.
So what does the judgement mean for Dorian Harris, the founder of discount website, Skoosh?
EFT: As the original complainant in the issue over hotel pricing, what does the CAT’s judgement mean to you?
DH: The judgement, to my mind, is a shocking indictment on the OFT. It wasn't just that they got things so wrong, but that they stubbornly dismissed all evidence to the contrary.
EFT: Why did you join the appeal?
DH: I joined the appeal because it unbearable to think of Expedia and Booking.com on the same side of the bench as the CMA. The companies I'd complained about were defending the authority I'd complained to. But, looking back, I can't take much solace from the verdict. The problem now seems to extend way beyond the hotel industry.
EFT: What do you mean by this?
DH: One of the central pieces of evidence in appeal was the Statement of Objections (the original case against the defendants). As the original complainant, I - and only me, not even Skoosh - was the only person outside of the OFT and the defendants themselves to have had sight of the original complaint against the defendants. Ahead of joining the appeal I asked if my barrister could see this Statement of Objections (SO). The CMA refused. When we joined the appeal [launched by Skyscanner], I asked again but this time publicly and my barrister got a copy. Skyscanner repeatedly asked for a copy and was refused each time. Then, a week before the trial, SkyScanner applied to the Competition Appeal Tribunal, the CMA tried to intervene even at that point saying the SO was irrelevant to the appeal and a 'fishing expedition' but the CAT overrode the CMA and granted SkyScanner a copy.
EFT: What impact do you think the result will have on the hotel industry?
DH: With regards to the impact on the hotel industry, I'd say none in the immediate future. This should have been a case about rate parity but the defendants, assisted by the OFT, drew the debate into members groups. In that sense, the entire appeal was a distraction and simply prolonging the agony for the rest of the hotels and smaller OTAs.
EFT: So what happens next?
DH: We're now reliant on the CMA to go away and come back with something better. In theory, the pressure is on them to do so. They certainly can't afford to come back to the CAT on a further appeal and lose again. That would be a PR disaster for them (this appeal was bad enough).
EFT: Are you confident that the next stage of the investigation will deliver a result for the industry?
DH: No, for all that, I have precious little confidence in this next stage. With no real clues as to how the OFT came to such an irrational decision in the first place, nor why the CMA chose to defend the OFT's solution in defiance of all logic, I have no reason to expect much more value to come from a further round of investigation.
EFT: So is it a bit of a case of too little too late?
DH: The defendants have managed to drag rate parity out four and a half years since I made my original complaint. There's little question that rate parity is in the firing line in Europe now. The German authorities are all over this. But really it's too late. Expedia and Booking.com have bullied their way to a virtual monopoly. Along the way they've bought up price comparison sites to ensure there's absolutely no transparency in the market and now Priceline is investing in the technology for hotels to manage their inventory.
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