Expedia, Travelocity Sued for Antitrust

Travelocity, Expedia and some of the nation’s biggest hotel chains have been sued for antitrust in a class action lawsuit.  Last week, Seattle-based Hagens Berman filed the case in the United States District Court for the Northern District of California.

At its core, the case alleges that the hotels and the travel sites engaged in a conspiracy to fix prices.  Essentially, all parties to the conspiracy agreed to maintain certain minimum prices.  The hotels would set a rack rate and the travel websites would never go below that rate even if they could do so and turn a profit.

Granted, there is one weak link in the plaintiffs’ argument.  The complaint suggests that the major hotel chains refused to deal with other travel discounters that would have re-sold their rooms at a steeper discount.  This type of refusal-to-deal claim has recently been rejected by numerous courts.

But putting the refusal-to-deal claim aside, it seems like the plaintiffs have a solid core theory of liability.  If the plaintiffs have credible evidence that such an agreement was reached and carried out, then this is a legitimate antitrust case.  As many antitrust commentators will note, horizontal agreements and price-fixing cases (Section 1 of the Sherman Act) have become much easier to prosecute than monopolization claims (Section 2).