Court Throws Out Online Price-Fixing Lawsuit Against Major Hotel Chains, Booking Sites

For years, some have accused America’s largest hotel chains of colluding with travel booking sites like Travelocity, Expedia, Orbitz, and Priceline to make sure that the room rates offered to consumers on these sites are the same. This practice, claimed plaintiffs in various lawsuits, effectively allowed the hotel chains to determine their own prices and kept the booking sites from competing against each other; meaning consumers could be paying more than they should. But a U.S. District Court judge feels differently.

Yesterday, the Dallas-based judge granted the dismissal [PDF] requested by the defendants — which included the above-mentioned sites, along with hotel chains like Hilton, Marriott, Starwood, Hyatt, Wyndham, and others.

While the plaintiffs had contended that the defendants behaved in an anticompetitive matter because the hotel chains would each provide all the travel sites with a bottom-level room rate below which the website was not to go. This meant that each of these websites could each claim they were offering the lowest price available at these hotels, as they were all offering the same price.

To the plaintiffs, this amounted to price-fixing by not allowing the sites to compete for customers with discounted room rates. Thus, the rates at these hotel rooms were artificially inflated, alleged the complaint.

But the judge in the case just didn’t see any evidence of a conspiracy here, writing:

Plaintiffs would have the Court infer an antitrust violation because a hotel ensures that its many distribution channels offer a specific room in a specific location for a specific date at the same price. In effect, Plaintiffs ask the Court to repudiate antitrust law’s well-established focus on interbrand pricing and the rule that a business need not compete against itself in setting the price of its own product.

Price-fixing allegations generally involve competitors colluding to set a price level for the entire market. The plaintiffs in this case never made such claims, instead alleging that each hotel was fixing its own room rates among pseudo-competitive booking sites.

“Just because defendants’ rational business interests can be recast in a suspicious light does not mean the allegations actually suggest a conspiracy was formed,” writes the judge, pointing out that the plaintiffs’ evidence actually showed “vigorous hotel competition” when you compared pricing at competing hotel chains.