Expedia 2013 Annual Report Download - page 25

A failure to comply with current laws, rules and regulations or changes to such laws, rules and
regulations and other legal uncertainties may adversely affect our business, financial performance or
results of operations.
Our business and financial performance could be adversely affected by unfavorable changes in or
interpretations of existing laws, rules and regulations or the promulgation of new laws, rules and regulations
applicable to us and our businesses, including those relating to travel licensing, the internet and online
commerce, internet advertising and price display, consumer protection, competition, and privacy. Unfavorable
changes or interpretations could decrease demand for our products and services, limit marketing methods and
capabilities, affect our margins increase costs and/or subject us to additional liabilities.
For example, there are, and will likely continue to be, an increasing number of laws and regulations
pertaining to the internet and online commerce that may relate to liability for information retrieved from or
transmitted over the internet, display of certain taxes and fees, online editorial and user-generated content, user
privacy, behavioral targeting and online advertising, taxation, liability for third-party activities and the quality of
products and services. Furthermore, the growth and development of online commerce may prompt calls for more
stringent consumer protection laws and more aggressive enforcement efforts, which may impose additional
burdens on online businesses generally.
We also have been subject, and we will likely be subject in the future, to inquiries from time to time from
regulatory bodies concerning compliance with consumer protection, competition, and travel industry-specific
laws and regulations. The failure of our businesses to comply with these laws and regulations could result in
fines and/or proceedings against us by governmental agencies and/or consumers, which if material, could
adversely affect our business, financial condition and results of operations. Further, if such laws and regulations
are not enforced equally against other competitors in a particular market, our compliance with such laws may put
us a competitive disadvantage vis-à-vis competitors who do not comply with such requirements.
The promulgation of new laws, rules and regulations, or the new interpretation of existing laws, rules and
regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we provide
travel services could require us to change certain aspects of our business, operations and commercial
relationships to ensure compliance, which could decrease demand for services, reduce revenues, increase costs
and/or subject the company to additional liabilities.
For example, in July 2012, the United Kingdom Office of Fair Trading (“OFT”), the competition authority in
the United Kingdom, issued a Statement of Objections alleging that Expedia and Booking.com entered into separate
agreements with InterContinental Hotels Group PLC (“IHG”) that restricted each online travel company’s ability to
discount the price of IHG hotel rooms. The OFT limited its investigation to a small number of companies, but has
stated that the investigation is likely to have wider implications for the industry within the United Kingdom. The
parties have proposed to address the OFT’s concerns by offering commitments and, on January 31, 2014, the OFT
announced that it had formally accepted the commitments offered by the parties, with no finding of fault or liability.
The commitments provide the parties to the OFT’s case (i.e. IHG, Booking.com and Expedia) with the right to
provide non-public discounts on the rate offered for room only hotel accommodation bookings at UK hotels to
eligible European Economic Area resident members of the parties’ membership programs (which must meet certain
minimum criteria). In addition, the commitments require Expedia and Booking.com to modify their “most favored
nations” clauses, as relevant, so as not to apply to any discounting activities described in the preceding sentence.
The commitments will be binding on the parties through January 31, 2016. Since July 2012, more than thirty
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. The cases have been
consolidated and are currently pending in federal court.
In addition, a number of competition authorities in other European countries have initiated investigations
into competitive practices within the travel industry and in particular in relation to most favored nations clauses
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