Expedia 2014 Annual Report Download - page 24

United Kingdom. The parties have proposed to address the OFT’s concerns by offering commitments, which
were accepted by the OFT, with no finding of fault or liability. Skyscanner Limited is challenging the OFT’s
decision. As a result, the Competition & Markets Authority (CMA), the United Kingdom’s competition
authority, will be reviewing the decision of its predecessor body, the OFT.
The Directorate General for Competition, Consumer Affairs and Repression of Fraud, a directorate of the
French Ministry of Economy and Finance with authority over unfair trading practices, also has brought a lawsuit
in France against the Expedia entities objecting to certain most favored nations clauses in contracts with French
hotels. This case is scheduled to go to trial in April 2015. In addition to the OFT investigation above, a number of
competition authorities, such as those in Belgium, China, Czech Republic, France, Germany, Italy, Austria,
Hungary, Sweden, Ireland, Denmark and Switzerland, have initiated sector inquires or investigations into
competitive practices within the hotel online booking sector and in particular in relation to most favored nations
clauses and other contractual arrangements between hotels and online travel companies, including Expedia.
These investigations differ from the OFT investigation and also differ in relation to the parties involved and the
precise nature of the concerns. We have engaged in discussions with certain relevant regulatory authorities
regarding their concerns. The outcomes of these inquiries or investigations or how our business may be affected
is uncertain. If we are required to significantly modify or eliminate any most favored nation clauses in our
arrangements with hotels, we may not be able to offer our consumers with competitive pricing as being offered
by other online travel companies.
We note in this context that on December 15, 2014, the competition authorities in France, Italy and Sweden
announced a proposed set of commitments offered by Booking.com to resolve the most favored nations clause
cases brought by these authorities against Booking.com. The commitments offered by Booking.com are subject
to a public comment period and are not currently final. In addition, the German Federal Cartel Office (“FCO”)
has required another OTA, Hotel Reservation Service (“HRS”), to remove its rate parity clause from its contracts
with hotels. HRS appealed this decision, which the Higher Regional Court Düsseldorf rejected on January 9,
2015. If we are required to significantly modify or eliminate any most favored nation clauses in our arrangements
with hotels in Europe, this may materially and adversely affect our competitive position and business in affected
European territories, for example by adversely affecting our ability to offer consumers making hotel room
bookings on our sites with the most competitive room rates available on other sites.
We are unable at this time to predict the timing or outcome of these various investigations and lawsuits or
similar future investigations or lawsuits, and their impact, if any, on our business and results of operations.
Furthermore, our future growth may be limited by anti-trust or competition laws. For example, our business
has grown and continues to expand, as a consequence our size and market share may negatively affect our ability
to obtain regulatory approval of proposed acquisitions, investments or significant commercial arrangement, any
of which could adversely affect our ability to grow and compete.
Application of existing tax laws, rules or regulations are subject to interpretation by taxing
authorities.
The application of various domestic and international income and non-income tax laws, rules and
regulations to our historical and new products and services is subject to interpretation by the applicable taxing
authorities. These taxing authorities have become more aggressive in their interpretation and/or enforcement of
such laws, rules and regulations over time, as governments are increasingly focused on ways to increase
revenues. This has contributed to an increase in audit activity and harsher stances by tax authorities. As such,
additional taxes or other assessments may be in excess of our current tax provisions or may require us to modify
our business practices to reduce our exposure to additional taxes going forward, any of which could have a
material adverse effect on our business, results of operations and financial condition.
A number of taxing authorities have made inquiries, brought lawsuits and have levied assessments asserting
that we are required to collect and remit hotel occupancy or other taxes, including, but not limited to, the legal
proceedings described in Part I, Item 3, Legal Proceedings. We are also in various stages of inquiry or audit with
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