(Refiles to correct timing of OFT charge in paras 2, 5)
LONDON Aug 9 Britain's InterContinental Hotels
Group will give online travel agents Expedia.com
and Priceline.Com Inc's Booking.com more
leeway to cut room rates in a bid to assuage watchdog charges it
was limiting competition.
The Office of Fair Trade last year accused IHG, whose
portfolio includes Holiday Inn and Crowne Plaza, of concluding
agreements that effectively set a bottom for prices by getting
the websites to agree not to use cuts in their own commission to
reduce the prices they offered.
The case is viewed as a test case for the sector as a whole
and was in response to a complaint from another website,
Skoosh.com, which said that a number of hotel chains were
preventing it from offering such discounted prices on room-only
Industry watchers say InterContinental, like other hotel
groups, is trying to keep some control of the market prices of
its rooms so that its own web sales are not sharply undercut by
agencies like Booking.com, Expedia or Skoosh.
But the OFT concluded last year after an investigation that
such contracts between hoteliers and agents could be limiting
consumers' ability to find better deals.
The compromise proposed on Friday effectively allows the
agencies again to choose to undercut the hotel group, but only
for certain types of customers - those on loyalty schemes or who
have made at least one previous booking with the agent.
That will allow InterContinental, the world's largest hotel
group, to retain more influence at least over the headline price
offered to first time consumers.
The OFT said in its report last month that the practice it
was concerned by was widespread in an industry where UK hotel
bookings through online agents totalled about 849 million pounds
($1.3 billion) in 2010.
IHG, which has said it believed its previous arrangements
did not breach competition laws, on Friday said it had worked
closely with the OFT to agree the new commitments, which are
designed to bring an end to the investigation without finding it
infringed any competition rules or the imposition of any fine.
OFT senior director Ann Pope said: "The OFT is consulting
on whether these commitments offer an immediate and effective
means of injecting some meaningful price competition into the
online offering of room only hotel accommodation bookings where,
in our provisional view, none may exist."
The agreement is open to consultation until Sept. 13.
($1 = 0.6429 British pounds)
(Reporting by Paul Sandle; editing by Patrick Graham and Keiron