UPDATE 2-Watchdog objects to InterContinental online tie-ups

Tue Jul 31, 2012 5:39am EDT

* OFT says deals infringe competition law

* Focus on InterContinental, Booking.com and Expedia

* Companies have three months to respond

* InterContinental shares down 1.1 percent

LONDON, July 31 (Reuters) - Britain's consumer watchdog has objected to deals struck between InterContinental Hotels Group and online travel agents Booking.com and Expedia, saying that they restrict online agents' ability to discount hotel room rates.

The Office of Fair Trading (OFT) said that its provisional view was that Booking.com, Expedia and InterContinental had infringed competition law and that its investigation may have wider implications because the alleged practices were potentially widespread.

The regulator alleged on Tuesday that deals between the world's biggest hotelier, InterContinental, and the two online players restricted the freedom of online agents to discount prices for hotel rooms.

This came as part of an OFT investigation started in September 2010 after a complaint by a small online agent, which claimed that it was prevented by various hotel chains from offering discounted prices for room-only accommodation.

"We want people to benefit fully from being able to shop around online and get a better deal from discounters that are prepared to share their commission with customers," OFT Chief Executive Clive Maxwell said in a statement.

"The OFT's provisional view is that Booking.com, Expedia and InterContinental Hotels Group have infringed competition law," he added.

Britain's InterContinental countered that it considered its arrangements with the online booking agents to be compliant with competition laws and consistent with the long-standing approach of the global hotel industry. It said that it is cooperating fully with the OFT's investigation.

The group, which runs more than 4,500 hotels across the world under brands such as Holiday Inn and Crowne Plaza as well as InterContinental, emphasised that these were only provisional findings and added that it had commercial arrangements with more than 200 online agents across the world.

The OFT said all parties now have three months to respond before it decides whether competition law has been infringed.

InterContinental shares were down 1.1 percent at 1,580 pence by 0815 GMT in a largely flat UK stock market.

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