Hotel and Internet Travel Agencies Win Price-Fixing Dismissal

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According to reports by Bloomberg News, hotel and Internet travel agencies have won a dismissal of a consumer antitrust lawsuit accusing them of conspiring to fix room prices. Starwood Hotels & Resorts Worldwide Inc., Expedia Inc. and other companies denied any attempt to fix prices. The hotels and online travel companies, known in the case as OTCs, criticized the amended complaint brought by the consumers, saying that it failed to allege any factual evidence to prove a far-reaching conspiracy to artificially control hotel room prices.

U.S. District Judge Jane J. Boyle in Dallas stated in a ruling, “The well-pled facts do not plausibly suggest that defendants entered into an industrywide conspiracy.”

  

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The intent of price fixing is to push the price of a product as high as possible, leading to profits for all sellers but may also have the goal to fix, peg, discount, or stabilize prices. The defining characteristic of price fixing is any agreement regarding price, whether expressed or implied.

The hotels and OTCs first moved to dismiss in July, according to Law360.com, which combines several putative class action suits filed last year that included companies such as Travelocity.com LP, Expedia Inc., Orbitz Worldwide Inc. and Hilton Worldwide Inc., among others.

The complaint alleges that “The defendants’ ‘best price’ or ‘best rate’ guarantees are nothing more than a cover for their conspiracy to fix prices.”

According to Hotel News Now, back in July 2012, The U.K.’s Office of Fair Trading in a statement of objections said that Booking.com, Expedia and InterContinental Hotels Group have infringed competition law.

“Price fixing is when Expedia, Orbitz and Priceline sit together in a conference room and decide our rate. That’s collusion,” president and CEO at Hospitality eBusiness Strategies, Max Starkov said “In this case the rate comes from the property itself. It’s you enforcing a singular market rate then providing discounts to whoever sells your product.

An attorney for the travel sites, Thomas Barnett, stated at a December hearing that, according to Bloomberg News, “The hotels can control the price of the rooms they offer.”

“There’s no collusion; whoever came up with this does not understand,” CEO Starkov said. U.S. District Judge Jane J. Boyle in Texas ruled that she would permit the consumers to re-file, provided they tell her within 30 days how any proposed revised complaint would remedy the shortcomings in the one she threw out and that she agrees. While collusion tends to be profitable, there is a chance that this is a misunderstanding, and the judge agreed.

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