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Expedia & Booking.com to be investigated by OFT for dodgy InterContinental pacts

Two of the UK's largest online travel agents are under investigation by the Office of Fair Trading (OFT) for inking potentially illegal deals with a leading hotel group that resulted in restrictions on the ability of competitors to offer discounted room rates.

The OFT has said that is of the initial view that the separate arrangements reached by Booking.com and Expedia with the InterContinental Hotels Group (IHG) had effectively prevented smaller online travel firms from offering cut-price room-only rates for IHG establishments, which include the popular Holiday Inn and Crowne Plaza hotel chains.

"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," OFT Chief Executive Clive Maxwell said in a statement.

"The OFT's provisional view is that Booking.com, Expedia and InterContinental Hotels Group have infringed competition law," he added.

The investigation may end up having wider implications on practices in the global hotel industry, with part of InterContinental's initial defence being to claim that it saw the arrangements as "compliant with competition laws and consistent with the long-standing approach of the global hotel industry".

All parties involved now have three months to answer to the charges, the OFT said, before it decides whether competition law has in fact been infringed.

The OFT certainly has its hands full in the digital sphere, taking on a Herculean task last month when it announced that it intended to investigate Facebook's blockbuster acquisition of Instagram.

Earlier in the year, the regulatory body found deals site Groupon guilty of breaching consumer protection law.