In the recent case of ACCC v Trivago N.V.  FCA 16 (20 January 2020), the Federal Court of Australia (“Federal Court”) handed down a decision finding that Trivago N.V. (“Trivago”) breached Australian Consumer Law by misleading consumers about hotel room rates, both on its website and television advertising.
The case (which was brought by the Australian Competition and Consumer Commission) centred around Trivago's televisionthat ran from December 2016 to July 2018, and on Trivago's website from December 2016 to September 2019. Moshinsky J, noted at [para 2] of the judgment:
The ACCC hadTrivago promised customers “impartial, objective and transparent hotel price comparisons which would allow them to quickly and easily identify the cheapest offer available”. But rather than serving consumers the best deals, instead the hotel aggregator promoted its best advertisers.
The Federal Court ruled that from at least December 2016, Trivago misled consumers by representing its website would quickly and easily help users identify the cheapest rates available for a given hotel, when in fact Trivago used an algorithm which placed significant weight on which online hotel booking site paid Trivago the highest cost-per-click fee (“CPC fee”) in determining its website rankings and often did not highlight the cheapest rates for consumers.
In August 2019, the ACCC took the company to court over misleading information on the website and television advertising aired more than 400,000 times from late 2013 to mid-2018.
In handing down his judgment, His Honour said at [para 225]:
During the trial, each side called two witnesses to express opinions on the algorithm used by Trivago to select the “Top Position Offer”. Trivago's own data showed that in more than 66 percent of listings, higher priced hotel offers were selected as the “Top Position Offer” over alternative lower priced offers.
His Honour found that Trivago had, at [para 242] of the judgment "… engaged in conduct that was misleading and deceptive or likely to mislead or deceive …"
Thealso reveals Trivago’s hotel room rate comparisons that used strike-through prices or text in different colours gave consumers a false impression of savings because they often compared an offer for a standard room with an offer for a luxury room at the same hotel.
ACCC Chair, Rod Sims said:
Commenting on the, Mr Sims said:
The Court also found that, until at least 2 July 2018, Trivago misled consumers to believe that the Trivago website provided an impartial, objective and transparent price comparison for hotel room rates.
According to the, an important element of the ACCC's case concerns the fact that Trivago's contractual terms require hotel booking sites to pay Trivago a fee (known as "the CPC fee") if a consumer clicks on the booking site’s offer through the Trivago website. The CPC was payable whether or not the consumer made a booking on the hotel booking site’s website, and is Trivago’s principal source of revenue.
Afor Trivago said:
The matter will return to the Federal Court for case management at a date yet to be set, the ACCC is seeking orders for penalties, declarations, injunctions and costs.
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Australian Competition and Consumer Commission v Trivago N.V.  FCA 16 (20 January 2020)
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