The likes of Thomas Cook and Tui Group should be wary of Commissioner Margrethe Vestager, who in the past has taken on Google and Apple. Should she find anything amiss there is the potential of a sizable fine and a revamp of their practices.
Tour operators and a hotel company are the latest alleged transgressors to come into the crosshairs of the European Union’s Competition Commissioner Margrethe Vestager.
Businesses in the EU are forbidden from discriminating on price between customers from different countries within it. The EU, however, suspects that some businesses are putting up barriers in order to fragment the market.
One of the biggest changes brought about by the EU has been the dissolution of borders between member countries. The organization has spent years trying to enable the smooth passage of goods, services and people offline but in many ways has struggled with the online world.
In an attempt to remedy this the EU by pushing through a Digital Single Market strategy, which was formally adopted in May 2015.
While the European Commission, which acts as the EU’s executive arm, said it welcomed hotels implementing innovative pricing structures, it said that they could not “discriminate customers on the basis of their location.”
The investigation follows complaints from customers and the Commission is now looking into agreements regarding hotel accommodation.
In parallel, the Commission is also running investigations into the video games industry and computer electronics manufacturers.
Should the EU identify any breach of competition laws the Commission has the power to fine a company up to 10 percent of its annual turnover.
Vestager, who is in charge of competition policy and has previously tangled with Apple and Google, said: “E-commerce should give consumers a wider choice of goods and services, as well as the opportunity to make purchases across borders. The three investigations we have opened today focus on practices where we suspect companies are trying to deny these benefits for consumers.
“The cases concern the consumer electronics, video games and hotel accommodation sectors. More specifically, we are looking into whether these companies are breaking EU competition rules by unfairly restricting retail prices or by excluding customers from certain offers because of their nationality or location.”
What the companies said
The companies involved have all issued responses to the investigation.
Thomas Cook said: “Thomas Cook notes the decision by the European Commission to investigate the availability of hotel bookings and pricing between member states. Across our 15 European source markets, Thomas Cook is committed to fair and open competition. We will cooperate fully with the Commission through this process.”
Tui Group said: We can confirm that the EU Commission’s Directorate-General for Competition has initiated formal proceedings against TUI and other tour operators as well as hoteliers. The Commission is reviewing certain practices between tour operators and hoteliers where hotel offers or hotel prices are set at different levels according to the nationality and / or residence of the customer. TUI will fully support the EU authority in the proceedings. By initiating a formal proceeding the EU commission has not taken any decision.”
Melia Hotels said: “The European Commission has informed Meliá of the commencement of an investigation concerning certain agreements regarding hotel reservations made through commercial electronic channels. Although this investigation affects other operators within the hotel sector, the same also applies to other completely different activities (manufacturers of electronic consumer devices and video games).
“The investigation by the Commission, as explained in the notification received, does not imply the existence of any infringement. They have simply initiated a process named as such in order to obtain more information regarding the matter in question. Meliá will continue to collaborate with the Commission both actively and constructively, as they have been doing until now, offering any clarification necessary regarding this matter and trusting in a speedy solution to the procedure that will confirm the absence of any undue conduct concerning the rights of European consumers.
A statement from DER Touristik, REWE Group’s travel and tourism arm, said:” DER Touristik confirms the examination of its online sales pricing by the EU Commission. A corresponding advance information was received by DER Touristik today.
“The EU Commission reviews in several industries whether it has come to discrimination against consumers on the basis of their nationality or their place of residence. In this context, online hotel bookings by travel organizations are being reviewed, among them those of DER Touristik.
“DER Touristik will actively cooperate with the EU commission and support the inquiry.
“Regarding the scope and duration of the investigation, DER Touristik cannot make a statement at this time.
A statement from Kuoni, which has since sold all of its tour operating businesses, said: “Kuoni Travel Holding Ltd. has been informed by the European Commission to be in scope of the investigation and is reviewing the documents received. Kuoni is committed to fair and open competition in markets around the world. Kuoni takes compliance with competition laws very seriously and will cooperate with the EU Commission throughout its process. The EU Commission states it investigates tour operating business. We want to put emphasis on the fact that the Kuoni Group has sold in 2015 its European tour operating activities with direct consumer contact. We examine if our remaining activities in B2B distribution of accommodation and destination services for group travel are in scope if at all.”
Photo credit: EU Competition Commissioner Margrethe Vestager. A number of tour operators and a hotel company are being investigated over suspected anticompetitive practices. Friends of Europe / Flickr