Ecommerce Traps: Price Fixing and Self-Packaging

Hotels sell rooms to tour operators at prices below their published rates. Operators sell those rooms on to consumers.

Sometimes the hotel asks the operator to agree that the price charged to consumers should not fall below the rates published on the hotel’s own web site. This agreement – a guarantee that the hotel’s rates cannot be undersold – can be judged to be a form of price collusion: a conspiracy to defraud the public. If so both parties could be found guilty of breaking competition laws and be fined up to 10% of their global turnover. 

It is well understood that when a travel company puts together a flight and another travel product such as hotel accommodation and sells them both as a package, it is acting as a tour operator and must be bonded to protect consumers in the event of financial collapse. 

In contrast, if an airline sells flights on its web site, it does not have to be bonded. But what is the situation if the airline’s web site offers a sightseeing trip and the sightseeing company goes out of business? Could the airline be responsible for recompensing the consumer? Alternatively, if a consumer has booked a hotel and a flight on a travel agent web site in two separate transactions and the airline subsequently goes bust, could consumers have a legal action against the web site that took the bookings?  Would the situation be the same if the web site were situated outside the EU?

The answers to these questions are not simple. The European Tour Operators Association, ETOA, fears that many travel companies are not sufficiently familiar with the law and could be unwittingly trading unlawfully. ETOA’s, Executive Director, Tom Jenkins says: “The risks of getting the legal nuances wrong are enormous.  One naive business decision could find your company put out of business.”

To help the industry gain a better understanding of the legal minefield and to advise travel companies on what they can and cannot do, ETOA are organising a seminar at the Business Design Centre in London at 2.30 pm on Tuesday 20th May.  The principal speakers will be:
Neil A. Baylis, a Partner at K & L Gates who specialises in travel industry competition law
Robin Baron, a highly experienced commercial lawyer who will discuss mistakes people make with the Package Travel Directive

Following their presentations, a panel discussion will take place with contributions from:
Andy Cooper, Director General, Federation of Tour Operators (FTO)
Soren Langelund, International Tourism Organisation (ITO)
Thomas Jenkins European Tour Operators Association (ETOA)

The seminar coincides with Eye4Travel’s Travel Distribution Summit.
Tuesday, 20th May 2008 2.30 – 4.30pm
Business Design Centre
52 Upper Street
Islington
London, N1 0QH

Registration: please email Simone Eisenhauer on seisenhauer@etoa.org
 

About ETOA
Since its foundation in 1989, ETOA has grown exponentially to include over 400 member organisations, of which more than a hundred are Tour Operators.   Collectively, ETOA represents over €7 billion spending on accommodation and travel services annually.

ETOA provides representation at the European government level for companies involved in bringing tourists to Europe.  The Association promotes greater awareness of the benefits provided by the group travel industry in Europe - particularly increased income and employment.  ETOA also influences European tourism policy and legislation.   

Areas of specific activity include:
Promoting Europe as a tourism destination
Establishing codes of conduct and guidelines for its members
Establishing commercial opportunities between buyers and sellers
Working with other travel & tourism associations to raise the industry’s profile