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From Antitrust Law Daily, October 29, 2014

Suit alleging price fixing conspiracy among online travel agencies dismissed

By Jeffrey May, J.D.

Consumers who claimed that they paid inflated prices for hotel rooms booked online have failed to allege a per se price fixing agreement between defending online travel agencies, the federal district court in Dallas has ruled. The court concluded that the plaintiffs had not overcome the pleading deficiencies in their consolidated amended complaint (CAC) and denied their motion for leave to file a second consolidated amended complaint (SCAC). A final judgment dismissing the matter would be issued (In re: Online Travel Company (OTC) Hotel Booking Antitrust Litigation, October 27, 2014, Boyle, J.).

In February, the court dismissed the consumers' claims of an industry-wide conspiracy to impose rate parity in the online hotel bookings market through resale price maintenance (RPM) agreements containing most favored nation clauses. In their CAC, the plaintiffs alleged that the conspiracy included 12 hotel chains, nine online travel agencies—including Expedia, Orbitz, Priceline and Travelocity—and a travel industry news company that purportedly facilitated the price fixing conspiracy through its annual industry conferences.

After dismissal, the consumers made “significant changes to their antitrust claims,” the court noted. For instance, the plaintiffs dropped the hotel defendants and focused on a per se horizontal price fixing conspiracy. However, amendment would be futile. The SCAC centered on the same “ambiguous, parallel market behavior” that was found to be insufficient in the CAC. The conspiracies alleged in the two complaints were “substantively identical,” the court concluded.

Dropping the hotel defendants eliminated an inherent contradiction in the first complaint's theory, it was noted. The hotels were no longer simultaneously victims and willing participants in the scheme. However, this unexplained contradiction was not the reason for dismissal of the CAC. The deficiencies in the SCAC were not overcome by the “mere re-configuration of the culpable actors,” according to the court.

Further, the factual allegations did not materially differ from the assertions that the court had already found insufficient. In the CAC, the consumers alleged that the defendants engaged in parallel conduct—the uniform adoption of similar RPM agreements and the resulting rate parity these agreements created in the online market for each hotel defendants’ rooms—and that “factual enhancements” placed this parallel conduct in a context suggesting a conspiracy. In its February order, the court rejected these allegations. In their amended filing, the plaintiffs could not convince the court that they would be able to establish an abrupt end to price competition to support the conspiracy claims. It appeared that the online travel agencies were adopting rational business strategies as opposed to engaging in a conspiracy. Claims under state antitrust and state consumer protection statutes that were wholly derivative of the amended horizontal conspiracy allegations also could not be pursued.

Vertical restraint claim under California law. In addition, the court would not allow the plaintiffs to add a claim that the online travel agencies’ RPM agreements with the hotels were per se unlawful vertical restraints under California state law. Noting deficiencies in the claim, the court denied leave to add “a single state antitrust claim premised on a theory that Plaintiffs previously said they were not pursuing” based on undue delay and unfair prejudice to the defendants.

The case is No. 3:12-cv-3515-B.

Attorneys: Steve W. Berman (Hagens Berman Sobol Shapiro LLP) for Richard Kimowitz. Christopher S. Yates (Latham & Watkins LLP) for Orbitz Worldwide Inc. Anne Y. Lee (Covington & Burling LLP), and Jessica B. Pulliam (Baker Botts) for Expedia Inc., and LP. George S. Cary (Cleary Gottlieb Steen & Hamilton LLP) for LP. Kevin J. Arquit (Simpson Thacher & Barlett LLP) for Inc.

Companies: Orbitz Worldwide Inc.; Expedia Inc.; LP; LP; Inc.

MainStory: TopStory Antitrust TexasNews

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