Online Hotel Bookers Face Antitrust Lawsuit

SAN FRANCISCO (CN) - Expedia, Travelocity and other online bookers conspired with Hilton, Marriott, Trump and other hotel chains to fix prices and restrain competition in online booking, customers say in a federal class action.

Lead plaintiff Nikita Turik claims the defendants conspired to maintain and enforce minimum resale price maintenance (RPM) agreements, to derail smaller retail sites that have gained access to the market.

Defendants include Expedia, Travelocity.com, Priceline.com, and Orbitz Worldwide, Hilton Worldwide, Marriott International, and Trump International Hotels Management, Intercontinental Hotels Group Resources, and others.

"(T)he online retailer defendants conspired with the hotel defendants and agreed to impose an RPM scheme that would fix the retail price for room reservations at the price the hotel defendants were selling the room reservations (rack rates) and restrain competition for room reservations in the market for online reservations," the complaint states. (Parentheses in complaint.)

The class claims the hotels "were charged with enforcing the RPM scheme against online retailers that competed or attempted to compete with the online retailer defendants on price. Thus the defendant retailer-hotel agreements were part of an anti-competitive scheme under which the online retailer defendants leveraged their substantial market power and dominance to induce hotel defendants into agreeing to do one or more of the following: (a) impose minimum resale price maintenance agreements on the retailers, (b) enforce the hotel-online retailer agreements as to the online retailers; and/or (c) refuse to supply or cut off supply to price-cutting online retailers."

Online retailers books as much as 50 percent of the defendant hotels' rooms, and the hotels believe "they need access to the online retailer defendants' distribution networks," according to the complaint.

Combined, the defendant online retailers control more than 50 percent of the Internet travel market, the complaint states.

"Just Expedia and its subsidiaries alone account for approximately 50 percent of the Internet travel business market," according to the complaint.

The class claims the defendant online retailers persuaded the defendant hotels not to do business with smaller online retailers who offer rooms at a cheaper rate, and that if the hotels did so, the online retailers would cut their association with the hotels.

Turik seeks class damages for false advertising, restraint of trade and business law violations.

Lead counsel is Jeff Friedman, with Hagens Berman Sobol & Shapiro.

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