UK: UK Competition Agency Accepts Commitments From Hotel And Online Travel Agents To Eliminate Discount Restrictions

Last Updated: 11 February 2014
Article by Matt Evans and Marguerite Lavedan

The UK's antitrust authority, the Office of Fair Trading ("OFT"), has accepted commitments from hotel company InterContinental and from online travel agents that will remove restrictions on their offering discounts on rates for hotel rooms. The OFT investigation reflects the interest that antitrust agencies have taken in restrictions on pricing and on most-favored-nations agreements.

Discount restrictions in the spotlight

Following a two-year investigation under the UK Competition Act, in July 2012 the OFT issued a statement of objections alleging that Intercontinental and the online travel agents had entered into anticompetitive agreements that restricted the online travel agents from discounting the rate at which "room only" (not part of a package with another travel product such as flights or car rental) hotel accommodation bookings are offered to consumers. A statement of objections is a formal stage in an OFT investigation at which the OFT sets out its provisional view that behavior it is investigating infringes UK and/or EU competition law. The OFT was concerned that the restrictions on discounting limited competition on room rates between different online travel agents and between online travel agents and the hotels' direct online sales channel. The OFT was also concerned that those restrictions increased barriers to entry, preventing online travel agents from entering the market, and that similar discount restrictions replicated in the wider market exacerbated the distortion of competition.

On January 31, 2014, the OFT accepted commitments offered by the parties under investigation that will change their agreements to enable hotels and online travel agents to offer discounts on hotel room rates. Commitments can be an attractive solution to companies under investigation and to the OFT. For the companies, they bring an investigation to a close without the OFT concluding that they have infringed competition law. For the OFT, they shorten an investigation, freeing up resources for other matters, and bring to an end the behavior the OFT believed may infringe competition law.

In this case, the commitments mean that online travel agents that deal with InterContinental will from now on be able to offer discounts to residents throughout the European Economic Area off room-only rates for hotels located in the UK. Similarly, the online travel agents may not restrict hotels from offering discounts on their own room rates.

The online travel agents will be free to publicize information regarding the availability of discounts so long as they do not provide non-members with specific information about the extent of discounts. In limiting the scope of the commitments and not allowing for unrestricted discounting, the OFT recognizes that there might be some efficiencies and consumer benefits that justify hotels having the ability to set and control the rate of their hotel room – particularly in relation to yield management. This is also reflected in the short duration of the commitments, which last for two years. The OFT considered that this would suffice for the full benefits of increased retail rate competition to be realized, while avoiding "excessive regulatory intervention in a dynamic innovative sector." After two years, the Competition and Markets Authority ("CMA"), the body set to replace the OFT and Competition Commission in April 2014, will be able to reassess the position and decide whether further action in this sector is appropriate.

Background on MFN clauses

The OFT's investigation centered on restrictions on online travel agents' discounts. This is an area under scrutiny in several EU countries. It is notable that, unlike the competition authorities in Germany and France, which have also been investigating hotel online bookings, the OFT did not directly address so-called most favored nation provisions or "MFN" clauses covering the retail rate. In particular, the OFT did not assess whether such clauses, under which hotels agree to offer online travel agents room reservations at a rate that is no higher than the lowest rate displayed by another online distributor, may breach UK or EU competition law.

MFN clauses have come under recent scrutiny from antitrust authorities, in particular in the U.S. and in the EU – notably the e-books case, involving book publishers and Apple, and even more recently with the Amazon price parity investigations in Germany and the UK. However, the lack of focus on MFNs in this online travel agency hotel booking case does not mean that MFNs are out of the scope of the OFT's investigation. MFN clauses are also caught by the commitments to the extent that such restrictions could prevent hotels or online travel agents from offering discounts on room-only rates. The parties have committed to amend, remove or not include any provisions that could undermine the new discounting freedom provided in the commitments. Thus, under the commitments, online travel agents shall not enter into or enforce any MFN in respect of discounts on room rates offered by hotels to their closed group members.


The OFT's investigation focused on a small number of major companies – the largest online travel agents in the UK and the world's largest hotel company. However, the OFT notes in its final decision that:

although the OFT has not investigated the extent to which similar discounting restrictions are replicated in the market, the OFT understands that the alleged practices are potentially widespread in vertical distribution arrangements in the industry.

This is a clear signal to the travel industry that restrictions on discounting imposed by online travel agents are at risk of being considered anticompetitive by the OFT. This case is intended as a shot across the bows of other companies with similar restrictions on discounting. The OFT has gone so far as to state that "as far as deterrence is concerned, the OFT expects that this decision [...] will promote competition law compliance in vertical distribution arrangements in the hotel online booking sector, and potentially beyond." Such companies should review their arrangements with suppliers and distributors to assess the impact of this case on their business.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Matt Evans
Marguerite Lavedan
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.