Greetings from Brighton, England.
I took a concern to the U.S.D.O.J. earlier this year relating to resale price maintenance and various other vertical agreements which plague the hotel industry. It won’t surprise you to hear that I was all but brushed off with a defence linked to the Leegin ruling.
I had no legal or economic background to speak of but even at the time I couldn’t understand how a case of such apparent minor significance (Leegin) could preclude a review of the hotel industry, especially with all the supporting evidence I offered. I made a few further attempts to persuade the department that the hotel industry merits individual investigation but left the matter when the O.F.T. here in the U.K. took the case on.
It was therefore with great interest that I read yesterday in the Wall Street Journal about the Federal Trade Commission taking a renewed interest in the Leegin Case.
On the same day, the Dallas Morning News wrote up the first analysis of the vertical arrangements in the hotel industry. Without going into too much detail at this stage, the concern within the hotel industry is that both hotel chains and online travel agents (Expedia, Sabre and others) contractually oblige their distributors and suppliers respectively to observe rate parity. In other words all distributors of hotel accommodation must now sell rooms at exactly the same rate.
Skoosh doesn’t even have a direct contract with hotels and we’re still forced to obey rate parity. If we don’t the hotels go to our suppliers and demand that they cut us off. Our New York based wholesale supplier, AlliedTpro, has entirely cut supply to us leaving us with the parting words:
‘Trust me I would welcome the additional business but cannot risk our contracts with Hilton’
I couldn’t convince the U.S.D.O.J. that this practice is significant enough to make some sort of investigation but early comments beneath the article in the Dallas paper show that the American consumers are concerned about the situation as well they may be. Although rate parity is beginning to flood Europe it is already firmly entrenched in the U.S. hotel market.
I don’t know if it makes sense for the U.S. to investigate this possible contravention of competition law separately or in conjunction with the O.F.T. Either way, I want to bring it to your attention now that I understand you’re looking into the practice of resale price maintenance again.
Should you required further detailed information I’d be happy to assist, although of course the O.F.T. has all the relevant documentation on the matter.
p.s. In the interests of transparency I have posted a copy of this email on my blog.