The Office of Fair Trading has accused online travel giants Booking.com and Expedia of striking deals with Intercontinental Hotels Group to restrict smaller agents' ability to offer discounted hotel rooms.
In a statement issued today, the OFT said that following a two-year investigation its provisional view was that the three companies had infringed competition law.
It said the infringements were anti-competitive in that they could limit price competition between online travel agents and increase barriers to entry and expansion for online travel agents that may seek to gain market share by offering discounts to consumers.
The formal investigation was initiated in September 2010, following a complaint submitted by a small online travel agent, alleging that it was being prevented by various hotel chains from offering discounted sale prices for room only hotel accommodation.
The OFT said it had limited the scope of its investigation to a small number of major companies, with a view to achieving a swift and effective outcome. However, the investigation is likely to have wider implications as the alleged practices are potentially widespread in the industry, it said.
OFT chief executive Clive Maxwell added: "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."
IHG said in a statement 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 it was cooperating fully with the OFT's investigation, which commenced in 2010.
The OFT said all parties now had the opportunity to respond before it decided whether competition law had in fact been infringed.
By Linsey McNeill
Tuesday, July 31, 2012