Competition regulator the Office of Fair Trading (OFT) has objected to deals struck between Intercontinental Hotels Group and online travel agents Booking.com and Expedia, claiming they have infringed competition law in relation to the online supply of room only hotel accommodation by online travel agents.

The Statement of Objections alleges that Booking.com and Expedia each entered into separate arrangements with IHG which restricted the online travel agent’s ability to discount the price of room only hotel accommodation.

The OFT considers that the alleged infringements are anti-competitive in that they could limit price competition between online travel agents and increase barriers to entry and expansion for online travel agents that may seek to gain market share by offering discounts to consumers.

Clive Maxwell, OFT Chief Executive, said: ‘We want people to benefit fully from being able to shop around online and get a better deal from discounters that are prepared to share their commission with customers.

‘The OFT’s provisional view is that Booking.com, Expedia and InterContinental Hotels Group have infringed competition law. However, these are the OFT’s provisional findings only. All parties will now have a full opportunity to respond to our Statement of Objections before we decide whether competition law has in fact been infringed.’

The formal investigation was initiated in September 2010, following a complaint submitted by a small online travel agent, alleging that it was being prevented by various hotel chains from offering discounted sale prices for room only hotel accommodation.

The OFT limited the scope of its investigation to a small number of major companies, with a view to achieving a swift and effective outcome. However, the investigation is likely to have wider implications as the alleged practices are potentially widespread in the industry.