HK watchdog’s probe triggers pledge from, and to drop contract clauses deemed a threat to competition

02-Apr-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Three major online travel agencies have offered to remove clauses in their contracts with accommodation providers that a Hong Kong watchdog investigation found could threaten competition and lead to higher prices for guests.

The Competition Commission said that, and had agreed favourable terms with businesses such as hotels that might undermine the online travel agency market, hinder new or smaller firms from entering and deprive consumers of choice.

“The existing clauses require accommodation providers in Hong Kong to always give the online travel agents the same or better terms as those they offer in all other sales channels,” the antitrust watchdog said in a statement, referring to clauses on room price, availability and conditions.

It said the terms made it unlikely that hotels or guest houses would offer a better room price, conditions or availability to a new online travel agency because they would then have to offer superior deals to the agencies already under contract with them. “In turn, this may have the potential effect of reducing the incentive of online travel agents to offer lower commission rates in the first place,” it said.

“As a consequence, buyers of accommodation services, such as hotel guests, possibly may not benefit from lower and more varied room rates.”

In response to the commission’s investigation, the three travel giants proposed taking out the relevant terms in their existing and future contracts with accommodation providers.

While the authorities regarded the pledges as appropriate, they launched a two-week public consultation into the proposed commitments on Tuesday in a step required by law before the case can be settled in this way.

It is the first time the watchdog has launched a public consultation into proposed commitments made by companies it has investigated.

“The commitments would ensure a speedy resolution to the concerns identified by the commission and are considered to be a proportionate response in the circumstances,” it said.

If accepted, the watchdog might agree to close its investigation without bringing proceedings in the Competition Tribunal.

The authorities expected the proposed resolution to bring greater competition and more choice in the market for consumers.


Category: Hong Kong

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