Expedia 2012 Annual Report Download - page 121

final decision. In such a case a final decision would be issued at the earliest in 2013. An appeal of an adverse
OFT decision is to the English courts but may involve a reference on matters of European Union law to the
European Court of Justice. We are unable at this time to predict the outcome of the OFT proceeding and any
appeal. In addition, a number of competition authorities in other European countries have initiated investigations
in relation to certain contractual arrangements between hotels and online travel companies, including Expedia.
These investigations differ in relation to the parties involved and the precise nature of the concerns.
Since August 20, 2012, thirty-two putative class action lawsuits, which refer to the OFT’s Statement of
Objections, have been initiated in the United States by consumer plaintiffs alleging claims against the online
travel companies, including Expedia, and several major hotel chains for alleged resale price maintenance for
online hotel room reservations, including but not limited to violation of the Sherman Act, state antitrust laws,
state consumer protection statutes and common law tort claims, such as unjust enrichment. The parties moved
before the Judicial Panel on Multi-District Litigation for consolidation of the cases. On December 11, 2012, the
Panel issued an order consolidating and transferring the cases to Judge Boyle in the United States District Court
for the Northern District of Texas. On January 23, 2013, another purported class action was filed in the U.S.
District Court for the Northern District of Illinois, Gillespie v. Travelscape LLC, et al.( Case No. 1:13-cv-00531)
alleging claims for violation of Sherman Act Section 1 and violation of the Washington Consumer Protection
Act. This latter claim is based upon the allegation that Travelscape, an Expedia, Inc. subsidiary, engages in
deceptive practices by bundling taxes and fees in hotel booking transactions with consumers and not adequately
disclosing the nature of the service fees and taxes it collects. The plaintiff has filed a motion for class
certification with the complaint. A conditional transfer of the antitrust claims to the Northern District of Texas
has been granted. Plaintiff will separately proceed on her Washington Consumer Protection Act claim against
Expedia.
NOTE 16 — Related Party Transactions
Mr. Diller, our Chairman of the Board of Directors and Senior Executive, through shares he owns
beneficially as well as those subject to an irrevocable proxy granted by Liberty Interactive Corporation,
controlled approximately 57% of the combined voting power of the outstanding Expedia capital stock as of
December 31, 2012. Mr. Diller effectively controls the outcome of all matters submitted to a vote or for the
consent of our stockholders (other than with respect to the election by the holders of common stock of 25% of the
members of our Board of Directors and matters as to which Delaware law requires a separate class vote). Upon
Mr. Diller’s permanent departure from Expedia, the irrevocable proxy would terminate and depending on the
capitalization of Expedia at such time, Liberty could effectively control the voting power of our capital stock.
In addition to serving as our Chairman and Senior Executive, Mr. Diller also serves as Chairman of the
Board of Directors and Senior Executive at IAC as well as a member of the Board of Directors at TripAdvisor.
Certain of our other executives also maintain roles with both IAC and TripAdvisor. Our certificate of
incorporation provides that no officer or director of Expedia who is also an officer or director of IAC or of
TripAdvisor will be liable to Expedia or its stockholders for breach of any fiduciary duty by reason of the fact
that any such individual directs a corporate opportunity to IAC or TripAdvisor instead of Expedia, or does not
communicate information regarding a corporate opportunity to Expedia because the officer or director has
directed the corporate opportunity to IAC or TripAdvisor, which could have the effect of increasing the risk of
conflicts of interest between the companies.
TripAdvisor, Inc. In connection with the spin-off, we entered into various agreements with TripAdvisor, a
related party due to common ownership, including, among others, a separation agreement, a tax sharing
agreement, an employee matters agreement and a transition services agreement. In addition, we will continue to
work with TripAdvisor pursuant to various commercial agreements between subsidiaries of Expedia, on the one
hand, and subsidiaries of TripAdvisor, on the other hand. During 2012, we recognized approximately $6 million
of revenue and expensed approximately $205 million related to these various agreements with TripAdvisor. From
December 21, 2011 to December 31, 2011, we expensed $4 million related to these various agreements. In
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