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trivago trips up: accc cracks down on advertising technology and digital platforms

28 February 2020
rita khodeir charlotte olsen
Read Time 3 mins reading time

The recent successful court action against travel comparison website Trivago has put businesses on notice to ensure their marketing and advertising does not amount to anti-competitive behaviour and complies with Australian Consumer Law.

Australia’s consumer watchdog, the Australian Competition and Consumer Commission (ACCC), took Trivago to the Federal Court, which found the company misled consumers in relation to its advertised hotel rates.

The ACCC alleged and successfully established that at various times between 1 December 2016 to 13 September 2019, Trivago made the following representations to consumers:

  1. That the Trivago website would quickly and easily identify the cheapest rates available for a hotel room responding to consumer’s search.
  2. That certain offers were the cheapest available for an identified hotel or had some other characteristic which made them more attractive than any other offer for that same particular hotel.
  3. That certain offers contained on the Trivago website, which were displayed using either a strike-through or different colour, were a comparison between prices offered for the same room category in the same hotel.

The Court found that the Trivago website did not quickly and easily identify the cheapest rates available for a hotel room responding to a customer’s search and that the prices did not always relate to the same room category. In addition, the Court found that Trivago engaged in conduct that led consumers to believe that the Trivago website was objective and impartial, helping consumers find the best price, when in fact Trivago was prioritising hotel booking sites that were paying Trivago the highest ‘cost-per-click’ fee.

By making the false representations and engaging in such conduct, the Court found that Trivago had contravened the Australian Consumer Law.

The ACCC has confirmed that it will be seeking penalties against Trivago in the millions of dollars. ACCC chair Rod Sims said the conduct of Trivago was “particularly egregious“. Mr Sims went on to say that the Court’s decision “sends a strong message to comparison websites and search engines that if ranking or ordering of results is based or influenced by advertising, they should be upfront and clear with consumers about this so that consumers are not misled“.

It therefore comes as no surprise that the ACCC has announced its commitment to an 18-month inquiry into advertising technology in conjunction with a five-year inquiry on digital platforms including Facebook and Google. The inquiries will focus on how technologies are facilitating the supply of online advertising to consumers and will investigate anti-competitive behaviour of digital platforms.

For review and advice on whether your business’s marketing and advertising complies with Australian Consumer Law, please feel free to contact us.

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trivago trips up: accc cracks down on advertising technology and digital platforms

28 February 2020
rita khodeir charlotte olsen

The recent successful court action against travel comparison website Trivago has put businesses on notice to ensure their marketing and advertising does not amount to anti-competitive behaviour and complies with Australian Consumer Law.

Australia’s consumer watchdog, the Australian Competition and Consumer Commission (ACCC), took Trivago to the Federal Court, which found the company misled consumers in relation to its advertised hotel rates.

The ACCC alleged and successfully established that at various times between 1 December 2016 to 13 September 2019, Trivago made the following representations to consumers:

  1. That the Trivago website would quickly and easily identify the cheapest rates available for a hotel room responding to consumer’s search.
  2. That certain offers were the cheapest available for an identified hotel or had some other characteristic which made them more attractive than any other offer for that same particular hotel.
  3. That certain offers contained on the Trivago website, which were displayed using either a strike-through or different colour, were a comparison between prices offered for the same room category in the same hotel.

The Court found that the Trivago website did not quickly and easily identify the cheapest rates available for a hotel room responding to a customer’s search and that the prices did not always relate to the same room category. In addition, the Court found that Trivago engaged in conduct that led consumers to believe that the Trivago website was objective and impartial, helping consumers find the best price, when in fact Trivago was prioritising hotel booking sites that were paying Trivago the highest ‘cost-per-click’ fee.

By making the false representations and engaging in such conduct, the Court found that Trivago had contravened the Australian Consumer Law.

The ACCC has confirmed that it will be seeking penalties against Trivago in the millions of dollars. ACCC chair Rod Sims said the conduct of Trivago was “particularly egregious“. Mr Sims went on to say that the Court’s decision “sends a strong message to comparison websites and search engines that if ranking or ordering of results is based or influenced by advertising, they should be upfront and clear with consumers about this so that consumers are not misled“.

It therefore comes as no surprise that the ACCC has announced its commitment to an 18-month inquiry into advertising technology in conjunction with a five-year inquiry on digital platforms including Facebook and Google. The inquiries will focus on how technologies are facilitating the supply of online advertising to consumers and will investigate anti-competitive behaviour of digital platforms.

For review and advice on whether your business’s marketing and advertising complies with Australian Consumer Law, please feel free to contact us.