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Case detail

B a c k

Directive article Article 5 2.
Article 6 1. (d)
Article 7 1.
Article 7 2.
Article 7 4. (b)
Article 7 4. (c)
Article 8 al1
National ID PS680
Country Italy Decision date 16/02/2011
Common name "EXPEDIA-SERVIZI DI AGENZIA TURISTICA ON LINE" Decision type Administrative decision, first degree
Court Autorità Garante della Concorrenza e del Mercato (Rome) Plaintiff(s) Italian Competition Authority
Court translation Italian Competition Authority Defendant(s) Expedia Inc.; Expedia Italy S.r.l.
Subject misleading advertising
Keywords advertisementdetainmentidentity of the traderinaccurate informationinternetmisleading omissionsmisleading pricepaymentprice information

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Headnote

 (1) It is an unfair commercial practice to advertise a minimum offer by using the price indication "as from", whereas in fact this minimum offer is nonexistent and a differing offer is presented at the conclusion of a contract.

(2) It is an unfair commercial practice to operate a payment system in such way that consumer funds are unjustifiably and without any reason detained by a trader.

(3) It is an unfair commercial practice to provide contact information about a trader in a way that it is difficult for an average consumer to determine where he must file his complaint.

Facts

Following several complaints reported by consumers, the Italian Competition Authority decided to launch an investigation against the defendants.

According to the complaints:
 (i) the defendants indicated on their websites the availability of flights, hotels and touristic offers that were in fact nonexistent;
 (ii) the defendants provided a payment system that held consumers' money unjustly and without reason;
 (iii) the defendants advertised false or misleading information concerning their services.

Conversely, the defendant Expedia Italy argued, that it was not involved in the alleged unfair business practices, operating only in marketing, advertising and promotion activities.

The defendants claimed that they were not involved in unfair commercial practices considering that:

(i) it was possible that a service offered on the website was not available or available at different price, due to the variability of flight offers. The phrase "as from", indicating that a higher price could be expected, was widely used in defendants' marketing activities. Moreover, defendants' indication of a price for a flight was correct, because no additional costs were added to the price which was displayed under the heading "Total Price". Additional costs were only added in case a consumer decided to order an optional service (e.g., luggage, seat reservation).

(ii) The payment system was beyond the scope of defendants' activities as it was a typical bank service. In any case, the defendant Expedia undertook to release detained funds, following consumers' complaints.

(iii) The contractual terms & conditions specified the defendant's identity. The website clarified that the agency services were provided by a different company.

Legal issue

(1) Is it an unfair commercial practice, to advertise a minimum offer by using the price indication "as from", whereas in fact this minimum offer is nonexistent and a differing offer is presented at the conclusion of a contract?

(2) Is it an unfair commercial practice, to operate a payment system in such way that consumer funds are unjustifiably and without any reason detained by a trader?

(3) Is it an unfair commercial practice, to provide contact information about a trader in a way that it is difficult for an average consumer to determine where he must file his complaint?
 

Decision

(1) It was upheld by the Authority that in fact, only at the moment of booking a consumer would be informed on the final price of the advertised service.

The investigation carried out by the Authority revealed that on defendants' website a particular price ("as from") was advertised, while at the end of a booking process another higher price was often presented. Additionally, the Authority found that the defendant omitted relevant information regarding some costs, which were revealed only at the end of the booking process, or in some cases, not explained at all (e.g. credit card costs, agency fee).

The Authority stated that, according to its established case law, the price indicated by a trader should include, from the beginning, every economic burden imposed on consumers and relating offers must allow an immediate and clear perception of terms & conditions of the offer.

(2) The Authority further concluded that defendants provided a payment system that held consumers' money unjustly and without reason. This was caused by the incapacity of the defendants to provide an efficient payment system which would be able to unfreeze the sums in real time.

More in particular, the delay in the recovery of funds was caused by the defendant Expedia which did not provide an adequate online payment system that could generate an automatic cancellation of operations that were not completed successfully.

In a short reasoning, the Authority considered this to be an aggressive commercial practice.

The same practice was found misleading, considering the lack of transparency concerning the payment system. The results of the investigation established that the trader used a standard response that was sent to consumers and which ascribed all liability to a bank.

Fund freezing and the absence of appropriate forms of assistance were considered as factors that did not allow an average consumer to take an informed transactional decision. In this context the Authority established an active role of the defendant Expedia Italia.

(3) Finally it was found by the Authority, that the defendants provided false information concerning their identity and their residence, with the aim to obstruct consumers' claims.

The investigation concluded that it was difficult for consumers to determine the defendants' residence (or its staff) to deal with consumer complaints.

In fact, considering the contractual terms and conditions and defendant's website, consumers were confused about defendant's identity, because several different companies, based in Italy and in USA, all members of the same group, were mentioned on the website.

Moreover, it was established that all claims were followed by a third company that was not mentioned on the website nor in the concerned contracts.

Therefore, consumers could believe that the services sold were realized on behalf of Expedia Inc by the company Easy Market, whereas the latter was not involved in the transactional operations.

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EN N/A
IT N/A

Result

The Italian Competition Authority, on the basis of the gravity and duration of the practices, decided to fine both traders and it issued a cease-and-desist order regarding the criticized practices.
 

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