The ACCC cites a number of reasons to question the $658 million deal, including the potential to decrease competition and increase commission.
The regulator says there are three big OTAs in Australian market – Expedia, Wotif and the Priceline group (housing Booking.com and Agoda) – which contribute a significant share of hotel bookings in the country.
But the “statement of issues” released by ACCC highlights the potential for the deal to “substantially lessen” competition in the Australian market and also the threat of Expedia hiking commission rates for hotels and other accommodation providers in the country.
ACCC chairman Rod Sims says:
“Market inquiries have indicated that Wotif is a major source of bookings for Australian accommodation providers and charges a lower commission rate than Expedia.”
Expedia and Booking charge less commission in Australia when compared to their other markets in which they operate, according to ACCC.
“Although the recent expansion of Booking.com and some smaller OTAs such as Hooroo might suggest that barriers to entry and expansion are not significant, market participants have identified barriers in the form of the high costs of advertising necessary to capture a critical mass of consumer ‘eyeballs’ and bookings, and sunk costs associated with the development of an online platform.”
ACCC’s recent actions in the Australian travel industry include:
In March 2013, ACCC imposed a penalty of about $10 million on FlightCentre for entering into “anti-competitive arrangements” with three airlines. In December 2013, in an effort to eliminate fake online reviews, ACCC released a set of guidelines for any Australian business (and also for review platforms) that has reviews in their website.
NB: Law image via Shutterstock.