I have been writing about Travel Law since 1977 and the last three years have been particularly exciting in terms of the developments in this expanding field of law. Recent antitrust class actions involving the travel industry have been brought by or against airlines, in-flight Internet providers, hotels, tour bus companies, ride-sharing companies and online travel sellers and have involved various types of alleged marketing misconduct such as resale price maintenance, parallel business behavior, misleading and unfair price guarantees, elimination of competitors and unfairly raising prices, substantial market foreclosures and price fixing.

Hop-On, Hop-Off Bus Tours

A popular means of exploring large cities is participating in a “hop-on, hop-off” double decker bus tour. Here, the focus is on concepts such as relevant market, competitive effects and barriers to entry as they apply to New York City's hop-on, hop-off bus tour market. Specifically, the court in United States of America and State of New York v. Twin America, Civil Action No. 12-cv-8989 (ALG)(GWG) (S.D.N.Y. March 18, 2015), approved a final judgment (and competitive impact statement) settling an antitrust lawsuit. The lawsuit arose from the joint venture of two hop-on, hop-off tour bus companies whereby they “allegedly controlled all of the most competitively meaningful bus stops on hop-on, hop-off bus tours and increased prices for riders by 10 percent since coming together in 2009. 'By eliminating the competition between them, the largest operators of New York City's iconic double-decker tour buses were able to raise prices and deprive city visitors of the benefits of a free and fair market'.” “US and NY Settle Antitrust Cases Against Bus Companies,” N.Y.L.J (March 18, 2015). The settlement provided for a payment of $7.5 million and giving up 50 bus stops in high-profile locations including Times Square and the Empire State Building.

Hotel Room Price Maintenance

In Online Travel Company Hotel Booking Antitrust Litigation, 997 F. Supp. 2d 526 (N.D. Tex. 2014), plaintiff consumers set forth “three antitrust claims which charge [hotel chains and online travel sellers (OTSs)] with [allegedly] engaging in an industry-wide conspiracy to uniformly adopt resale price maintenance agreements containing most favored nation clauses, in an effort to eliminate price competition among hotel room booking websites.” In addition the complaint alleged that defendants deceptively published “best price” or “lowest price” guarantees on their websites while knowing that “best price” was the same fixed rate offered across all hotel booking websites. In dismissing the antitrust claims the court held that “the real 'nub' of the complaint … Is Defendants' parallel business behavior which is not suspicious … Generally hotels across the industry may find that controlling minimum resale prices is the 'only feasible' way of effectuating a profitable price discrimination strategy—that is, a strategy to 'sell the same product [i.e., hotel room], costing the same to make and sell, at different prices to different consumers'.”

Price Guarantees Deceptive

However, as for defendants' alleged price guarantees (e.g., “OTA Defendant Expedia's best price guarantee: 'Find a cheaper trip within 24 hours of booking and we'll refund the difference-and give you a travel coupon worth $50'”), the court held that they may have been both misleading and unfair

It seems plausible that an ordinary consumer would reasonably infer from this advertisement that Expedia is trolling the online market, looking for the lowest price for a particular room in the 24 hour-period and publishing that rate for the consumer. Expedia even implies that it is putting in its best effort to find the consumer the best price, promoting that if it slips up, the consumer gets a refund and a $50 travel coupon. In reality, Expedia's promise is illusory—it has entered into a contract … that ensures the rate offered is the same 'low' price offered everywhere else online … These allegations, therefore, plausibly show that a reasonable consumer may be mislead to believe she was receiving the lowest price available in a competitive market.

Stifling Ridesharing Competition

In Wallen v. St. Louis Metropolitan Taxicab Commission (MTC), 2016 WL 5846825 (D. Mo. 2016), Uber alleged “violations of the Sherman Act … by Defendants in (their) attempt to prohibit Uber … from competing in the St. Louis market for for-hire transportation. Plaintiffs claim to bring this antitrust action to put an end to the anticompetitive conduct of defendant MTC and several of its commissioners … many of whom are active market participants in the very market that the MTC regulates'.”

Anticompetitive Conduct

In denying the MTC's motion to dismiss the court noted:

Although the MTC argues that [its] powers and authority give rise to a clear articulation of a policy to allow anticompetitive conduct, a close analysis of the MTC's authority establishes just the opposite. The establishment of the MTC demonstrates that the contemplation was that its purpose was to regulate and oversee vehicles for hire to ensure public safety standards and maintain the integrity of the public transportation system. Rather than being exclusionary, i.e., allowing a policy of anticompetition, the statutory framework provides a means for ensuring the vehicle for hire industry is properly licensed, that the rules and fee structures are regulated and the individual drivers properly screened. None of the statutory authority gives any indication that the legislature intended to adopt a policy of anticompetition through the creation of the MTC … The displacement of competition is not the logical result of the statutory framework, rather, the logical result is providing a public transportation system that is safe and efficient. As such, the state has not clearly articulated a policy of allowing anticompetitive conduct.

Uber Price Fixing Conspiracy

In Meyer v. Kalanick, 2016 WL 4073071 (S.D.N.Y. 2016), it was alleged that Mr. Kalanick had orchestrated and facilitated a price fixing conspiracy with Uber drivers to use Uber's pricing algorithm to set the prices charged to Uber riders, thereby restricting price competition among drivers to the detriment of riders. In denying defendants' motion to dismiss, the court noted: “Plaintiff alleges that the drivers have a 'common motive to conspire' because adhering to Uber's pricing algorithm can yield supra-competitive prices … and that if the drivers were acting independently instead of in concert, 'some significant portion' would not agree to follow the Uber pricing algorithm'.”

Arbitration Clause Enforced

In reversing and remanding, the U.S. Court of Appeals for the Second Circuit noted: