Priceline 2014 Annual Report Download - page 34

Item 3. Legal Proceedings
Competition Reviews
In July 2012, the Office of Fair Trading (the "OFT"), the predecessor competition authority in the United Kingdom to the Competition
and Markets Authority ("CMA"), issued a "Statement of Objections" ("SO") to Booking.com, which set out the OFT's preliminary views on why
it believed Booking.com and others in the online hotel reservation industry were allegedly in breach of E.U. and U.K. competition law. The SO
alleged, among other things, that there were agreements or concerted practices between hotels and Booking.com and between hotels and at least
one other OTC that restricted Booking.com's (and the other OTC's) ability to discount hotel room reservations, which the OFT alleged was a
form of resale price maintenance. We dispute the allegations in the SO.
On January 31, 2014, the OFT announced that it had accepted commitments offered by Booking.com, as well as Expedia and
Intercontinental Hotel Group, (the "Commitments") to close the investigation on the basis that they address the OFT's competition concerns.
The OFT closed its investigation with no finding of infringement or admission of wrongdoing and no imposition of a fine.
The Commitments provide, among other things, that hotels will continue to be able to set retail prices for hotel room reservations on all
OTC websites, such as Booking.com. Under the Commitments, OTCs, such as Booking.com, have the flexibility to discount a hotel's retail
price, but only to members of closed groups, a concept that is defined in the Commitments, who have previously made a reservation through the
OTC. The discount may be up to Booking.com's commission. In addition, the Commitments provide that Booking.com will not require rate
parity from hotels in relation to discounted rates that are provided by other OTCs or hotels to members of their closed groups, provided the
discounted rate is not made public. The Commitments apply to bookings by European Economic Area residents at U.K. hotels.
On March 31, 2014, Skyscanner, a meta-search site based in the United Kingdom, filed an appeal in the Competition Appeal Tribunal
("CAT") against the OFT's decision to accept the Commitments. Booking.com intervened in support of the CMA in the CAT. In its decision
dated September 26, 2014, the CAT found that the CMA was wrong to reject Skyscanner's arguments about the negative impact of the
Commitments on its business and price transparency generally without properly exploring these arguments. The CAT's decision vacates the
CMA's Commitments decision and remits the matter to the CMA for reconsideration in accordance with the CAT's ruling. The CMA did not
appeal the CAT's decision. It is uncertain what action the CMA will take in response to the CAT's ruling, which could involve re-opening,
closing or suspending the investigation.
Investigations have also been opened by the national competition authorities in the Czech Republic, France, Germany, Italy, Austria,
Hungary, Sweden, Ireland, Denmark and Switzerland that focus on Booking.com's rate parity clause in its contracts with accommodation
providers in those jurisdictions. Competition related inquiries have also been received from the competition authority in China. We are in
ongoing discussions with the relevant regulatory authorities regarding their concerns. We are currently unable to predict the outcome of these
investigations or how our business may be affected. Possible outcomes include requiring Booking.com to amend or remove its rate parity clause
from its contracts with accommodation providers in those jurisdictions and/or the imposition of fines.
On December 15, 2014, the French, Italian and Swedish national competition authorities, working in close cooperation with the
European Commission, announced their intention to seek public feedback on commitments offered by Booking.com in connection with
investigations of Booking.com's rate parity provisions in its contractual arrangements with accommodation providers. If the proposed
commitments are accepted by the French, Italian and Swedish competition authorities, the investigations in those countries will be closed with
no finding of infringement or admission of wrongdoing and no imposition of a fine. Under the terms of the proposed commitments,
Booking.com would replace its existing price parity agreements with accommodation providers - sometimes also referred to as "most favored
nation" or "MFN" provisions - with "narrow" price parity agreements. Under the "narrow" price parity agreement, an accommodation provider
would still be required to offer the same or better rates on Booking.com as it offered to a consumer directly, but it would no longer be required to
offer the same or better rates on Booking.com as it offered to other on-line travel companies. If the commitments are accepted by the French,
Italian and Swedish competition authorities after they have been market tested, Booking.com will implement the commitments within six months
of their being accepted. We are currently unable to predict the outcome of the market test of the proposed commitments offered in France, Italy
and Sweden or the impact the proposed commitments in France, Italy and Sweden will have on the on-going investigations in other European
countries or how our business may be affected by the proposed commitments if accepted. We note that the German competition authority has
required Hotel Reservation Service to remove its rate parity clause from its contracts with hotels, and Hotel Reservation Service's initial appeal
was denied. To the extent that
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