Stay current on the latest developments from agencies including the CFPB, Federal Reserve, FDIC, and OCC to advise clients on real-life regulatory situations.
Hyatt Hotel Corp., Hilton Worldwide Holdings, Marriott International Inc. and three other major hotel chains are accused of agreeing not to use each other’s names in online search advertising to reduce head-to-head competition and raise prices.
The March 19 complaint says 60 percent of hotel room inventory in the U.S. is involved in the lawsuit. The plaintiffs sued Hyatt, Hilton, Marriott, InterContinental Hotels Group PLC, Choice Hotels International Inc., and Wyndham Worldwide Corp.
A putative class action filed in the U.S. District Court for the Northern District of Illinois claims those agreements illegally restrain consumers from seeing competing options when they search online and then make hotel room purchases. The plaintiffs seek treble damages under federal antitrust laws on behalf of everyone who booked a room online in the U.S. between January 1, 2015, and the present.
The plaintiffs contend that the hotels’ agreement not to use each other’s intellectual property (branded names) in their own keyword search advertising and the enforcement of those same terms at online travel agents has made it harder for consumers to compare prices. They say that by avoiding these “readily available online advertising methods to compete for consumers shopping for hotel rooms,” the hotel companies are engaged in illegal bid rigging.
Demonstrating why a search returns specific results, and tying that to particular customer outcomes, may be difficult.
The complaint includes screenshots of searches on hotel brand names and locations as examples searches turning up only results that include that brand. As an example, the complaint says, if you search for the Honolulu Hyatt, you won’t get any search results that show you a Hilton in the area.
The world of online search is, however, more complex than that. Industry participants told Bloomberg Law that how search results display is more a result of how the search engine structures its results than a reflection of a hotel’s intent in advertising.
“Google and Bing’s algorithms are notoriously secret and a lack of an ad on an individual search doesn’t prove collusion or mean that an advertiser chose not to participate in the auction,” David Naffziger, CEO of online brand protection software provider BrandVerity told Bloomberg Law.
The complaint compares the hotels’ agreement not to use each other’s brand names to conduct the Federal Trade Commission recently attacked in the contact lens industry. In late 2017, an FTC administrative law judge held that online contact lens retailer 1-800 Contacts Inc. unlawfully restricted competitors from buying ads on results pages generated in response to searches for “1-800 Contacts.” 1-800 Contacts made agreements with at least 14 rivals not to do so, which the FTC said was unfair competition.
1-800 Contacts has appealed that decision to the full FTC, and the appeal is pending.
The case is Tichy v. Hyatt Hotels Corp. , N.D. Ill., No. 18-cv-01959, 3/19/18 (N.D. Ill. 3/19/18).
To contact the reporter on this story: Eleanor Tyler in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Fawn Johnson at email@example.com
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)