Accommodation Aggregator Penalised by Federal Court for Breaches of Australian Consumer Law

*Please note that this article provides general information only and will not be applicable in all circumstances, nor should it be relied upon as legal advice. Should you wish to obtain legal advice, we recommend that you get in touch with us.

In a significant recent decision, the Federal Court of Australia has ordered German platform Trivago N.V. (Trivago) to pay pecuniary penalties of nearly $45m for misleading consumers on its website for a period of nearly three years. The judgment, Australian Competition and Consumer Commission v Trivago N.V. (No 2) [2022] FCA 417, published on 22 April 2022, comes after the ACCC successfully established Trivago’s liability for breaches of the Australian Consumer Law (ACL) in a decision handed down in January 2020.

Facts

Trivago operates an accommodation-based search engine platform which aggregates accommodation options (typically hotels) based on the information inputted by its users (such as location, dates, number of guests etc.). The purpose of this platform is to allow consumers to compare accommodation providers, to ultimately identify the best deal based on their preferences.

The conduct under scrutiny concerns the way in which Trivago would display search results on its website. When users would enter their preferences, certain booking sites would be displayed more prominently than others, in respect of the same accommodation. Trivago’s advertising suggested that these more prominent results offered the best price for the relevant hotel. However, the prominence of the displayed offers was in fact significantly determined by the amount of money that these booking sites paid to Trivago. In reality, more expensive offers were prioritised over cheaper offers in 66.8% of listings.

As a result, in 2020, Trivago was found to have contravened sections of the ACL relating to:

(a) the making of false or misleading representations in connection with the supply or possible supply of goods or services, with respect to the price of the goods or services; and

(b) engaging in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services.

Key findings

The total penalties of $44.7m fall between Trivago’s contended penalty of $15m, and the ACCC’s argued sum of at least $90m. In arriving at this figure, Moshinsky J gave regard to:

the lengthy period in which Trivago engaged in its misleading conduct, being nearly three years;
the large number of consumers that were affected by the conduct, noting that offers were selected 111 million times in the offending period, and 93% of these selections were the prominent offers displayed by Trivago; and
the substantial loss or damage caused by Trivago’s contraventions.

Importantly, it was estimated that the difference between the prices of hotel rooms booked by users who selected prominent offers that were not the cheapest available, and the prices they would have paid had they selected the cheapest offer available, was $36,985,090.

Fallout

Following the initiation of proceedings by the ACCC, Trivago took steps to amend its business model, including amending its code of business conduct and consumer protection compliance principles. The substantial penalties ordered by the Federal Court serve as a warning to other aggregator platforms about how they display the results which appear on their websites.

How we can help

Looking for corporate law advice? Get in touch to book a complimentary meeting to discuss how we can help you.

Author, Darcy Keogh.

Key contacts