THE ORIGINATING APPLICATION, THE CONCISE STATEMENT AND THE CONCISE RESPONSE
16 The ACCC's allegations are set out in its further amended originating application (the Originating Application) and its further amended concise statement (the Concise Statement). Trivago's response is set out in its concise response to the further amended concise statement (the Concise Response).
17 In the Originating Application and the Concise Statement, the ACCC makes allegations that relate to a period up to "the present". However, in the course of the trial I proposed, and the ACCC accepted, that the period of the allegations should conclude on the last day of the trial, which was 13 September 2019. The Relevant Period is, therefore, from 1 December 2016 to 13 September 2019. The ACCC's allegations relate to the following four sub-periods within the Relevant Period:
(a) the period from 1 December 2016 to 29 April 2018 (the first relevant sub-period), a period of approximately 17 months;
(b) the period from 29 April 2018 to 20 November 2018 (the second relevant sub-period), a period of approximately seven months;
(c) the period from 20 November 2018 to 13 February 2019 (the third relevant sub-period), a period of approximately three months; and
(d) the period from 13 February 2019 to 13 September 2019 (the fourth relevant sub-period), a period of approximately seven months.
18 Consistently with the approach taken by the parties, the website during the first relevant sub-period will be referred to as website version 1, the website during the second relevant sub-period will be referred to as website version 2, the website during the third relevant sub-period will be referred to as website version 3 and the website during the fourth relevant sub-period will be referred to as website version 4. It should be noted that the appearance of the website was not necessarily static within each sub-period; on some occasions, as detailed below, changes were made within a sub-period.
19 In its Originating Application and Concise Statement, the ACCC refers to online booking sites, online travel agents and participating hotels as "advertisers". However, I prefer to use the term "Online Booking Sites" to refer to the entities that make offers for hotel accommodation that are displayed on the Trivago website. That is because I consider it unlikely that consumers using the Trivago website would consider those entities to have placed advertisements on the Trivago website; rather, consistently with Trivago's marketing, I consider it likely that consumers would see the Trivago website as aggregating offers for hotel accommodation and providing a price comparison service in relation to such offers. Accordingly, I prefer to use the term "Online Booking Sites".
20 A convenient reference point for the ACCC's allegations in this proceeding is the declarations it seeks, as set out in the Originating Application. I will therefore first summarise the declarations sought by the ACCC in the Originating Application, and then refer to some of the further allegations set out in the Concise Statement.
21 In relation to the Cheapest Price Representation, the ACCC seeks a declaration to the effect that, in the first relevant sub-period, Trivago, in trade or commerce, engaged in conduct that was:
(a) misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law; and
(b) liable to mislead the public as to the nature, characteristics and/or suitability for purpose of the accommodation services displayed on the Trivago website in contravention of s 34 of the Australian Consumer Law,
by representing in online and television advertising that the Trivago website would quickly and easily identify the cheapest rates available for a hotel room responding to a consumer's search (referred to in these reasons as the "Cheapest Price Representation"), when in fact the Trivago website did not enable consumers to quickly or easily identify the cheapest rates available for particular hotel rooms.
22 In relation to the Top Position Representation, the ACCC seeks a declaration to the effect that, during the Relevant Period (i.e. all four sub-periods), Trivago, in trade or commerce:
(a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law; and
(b) in connection with the supply of accommodation services, made false or misleading representations with respect to the price of those services in contravention of s 29(1)(i) of the Australian Consumer Law,
by:
(c) prominently displaying on the Trivago website, Top Position Offers (which were sometimes accompanied by boxes identifying them as "Top Deals" or depicting a percentage saving) and thereby representing that the Top Position Offers were the cheapest available offers for an identified hotel, or had some other characteristic which made them more attractive than any other offer for that hotel (referred to in these reasons as the "Top Position Representation"), when in fact:
(a) the Top Position Offers were not always the cheapest available offers for an identified hotel;
(b) Trivago did not select the Top Position Offers by reference to any other characteristic which may have made them the most attractive offer; and
(c) Trivago selected the Top Position Offers primarily by reference to the CPC payment Trivago would receive from the Online Booking Site that submitted the offer if a consumer clicked on the offer.
23 In relation to the Strike-Through Representation, the ACCC seeks a declaration to the effect that, during the first and second relevant sub-periods, Trivago, in trade or commerce:
(a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law; and
(b) in connection with the supply of accommodation services, made false or misleading representations with respect to the price of those services in contravention of s 29(1)(i) of the Australian Consumer Law,
by displaying the Strike-Through Price above the Top Position Offers on the hotel listing display and the map portion of the Trivago website, and thereby representing that the Strike-Through Price was a comparison between prices offered for the same room category in the same hotel (referred to in these reasons as the "Strike-Through Representation"), when in fact the Strike-Through Price that Trivago displayed often related to a more expensive room category than the Top Position Offer.
24 In relation to both the Strike-Through Representation and the Red Price Representation, the ACCC seeks a declaration to the effect that, during the third relevant sub-period, Trivago, in trade or commerce:
(a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law; and
(b) in connection with the supply of accommodation services, made false or misleading representations with respect to the price of those services in contravention of s 29(1)(i) of the Australian Consumer Law,
by:
(c) displaying the Red Price above the Top Position Offers on the hotel listing display, and thereby representing that the Red Price was a comparison between prices offered for the same room category in the same hotel (referred to in these reasons as the "Red Price Representation") when in fact the Red Price that Trivago displayed often related to a more expensive room category than the Top Position Offer; and
(d) displaying the Strike-Through Price above the Top Position Offers on the map portion of the Trivago website, and thereby representing that the Strike-Through Price was a comparison between prices offered for the same room category in the same hotel (referred to in these reasons as the "Strike-Through Representation"), when in fact the Strike-Through Price that Trivago displayed often related to a more expensive room category than the Top Position Offer.
25 Further, in relation to the fourth relevant sub-period, the ACCC seeks a declaration to the effect that Trivago, in trade or commerce:
(a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law; and
(b) in connection with the supply of accommodation services, made false or misleading representations with respect to the price of those services in contravention of s 29(1)(i) of the Australian Consumer Law,
by displaying the Red Price above the Top Position Offers, and thereby representing that the Red Price was a comparison between prices offered for the same room category in the same hotel (referred to as the "Red Price Representation"), when in fact the Red Price that Trivago displayed often related to a more expensive room category than the Top Position Offer.
26 The ACCC also seeks three declarations in relation to the additional conduct allegations. In relation to the first relevant sub-period, the ACCC seeks a declaration to the effect that Trivago, in trade or commerce engaged in conduct that was:
(a) misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law; and
(b) liable to mislead the public as to the nature, characteristics and/or suitability for purpose of the accommodation services displayed on Trivago's website in contravention of s 34 of the Australian Consumer Law,
by making the Cheapest Price Representation, and by making Top Position Offers together with the Top Position Representations and the Strike-Through Representation, and thereby leading consumers to believe that the Trivago website provided an impartial, objective and transparent price comparison which would enable them to quickly and easily identify the cheapest available offer for a particular (or the exact same) room at a particular hotel when, in fact, the Trivago website:
(c) did not enable consumers to quickly or easily identify the cheapest prices available for a particular hotel room; and
(d) directed consumers to more prominently displayed offers made by Online Booking Sites that offered to make higher CPC payments to Trivago than competing Online Booking Sites each time a consumer clicked on the offer, irrespective of the prices offered to consumers for a particular hotel room.
27 In relation to the second and third relevant sub-periods, the ACCC seeks a declaration in similar terms, save that, rather than relying on the Cheapest Price Representation (which is alleged only in respect of the first relevant sub-period), the ACCC relies on Trivago making Top Position Offers on the Trivago website, making the Top Position Representation, making the Strike-Through Representation, and:
advertising the Trivago website using statements such as: "Compare over 250 booking sites and find the ideal hotel at the best price!"; "find your ideal hotel and compare prices from different websites"; "impartial comparison"; "find the ideal hotel at a great price"; and "Compare & Save. No Ads or Pop-Ups".
28 In relation to the fourth relevant sub-period, the declaration sought is similar to that sought in respect of the second and third relevant sub-periods. The ACCC relies on Trivago making Top Position Offers on the Trivago website, making the Top Position Representation, making the Red Price Representation, and
advertising the Trivago website using statements such as: "Find your ideal hotel and compare prices from different websites"; "impartial comparison"; "find the ideal hotel at a great price"; and "Compare & Save. No Ads or Pop-Ups".
29 The ACCC's case is developed in the Concise Statement. I will focus on the allegations in the Concise Statement that go beyond those already apparent from the declarations sought in the Originating Application. In relation to the Top Position Representation, the Concise Statement includes the following allegations:
12 Contrary to the Top Position Representation, the Top Position Offer was not always the cheapest available offer and Trivago did not select it by reference to any other characteristic which may have made it the most attractive offer. Trivago selected the Top Position Offer primarily by reference to the value of the CPC Trivago would receive from the advertiser who submitted the offer.
13 Trivago used an algorithm to determine the Top Position Offer. The algorithm placed a significant weighting on the value of an advertiser's CPC bid. By applying the algorithm, Trivago gave greater prominence to offers from advertisers who had submitted higher CPC bids than to cheaper offers at the same hotel from advertisers who submitted lower CPC bids. In addition, from at least May 2017 to at least October 2017, Trivago set a minimum CPC amount. If an advertiser submitted a CPC bid below this amount, the algorithm prevented the Trivago website from displaying the advertiser's offer, even if it was the cheapest price offer Trivago had received. The result was that often the Top Position Offer was not the cheapest price offer Trivago had received for the relevant hotel.
…
15 Beneath the Fourth Position [Offer], Trivago displayed a "more deals" button. Clicking on this button opened a list of other offers which advertisers had submitted for the same hotel. From at least May 2017 to at least October 2017, the "more deals" button did not display the cheapest price offer which Trivago had received for that hotel. In addition (as set out in paragraph 13) if an advertiser made a CPC bid that was less than a predetermined minimum, Trivago did not display the advertiser's offer on its website at all, even if it was the cheapest price offer Trivago had received for the hotel. From a date not before October 2017, Trivago changed the "more deals" button to display the cheapest offer it had received and introduced a mouse over information button in respect of the top position algorithm. These changes did not affect the Top Position Representation.
30 The Concise Statement also includes the following allegation:
19 By making the Strike-Through Representation and the Red Price Representation (separately or in combination) [and] by displaying the Percentage Saving or Top Deal box next to the Top-Position Offer, Trivago reiterated and reinforced the Top Position Representation. One effect of this was that consumers (especially those who had viewed advertising in which Trivago made the Cheapest Price Representation) were less likely to open the "more deals" list, even after Trivago amended the button to identify that cheaper price offers were available. The ACCC refers to the information contained in confidential Annexure 3.
In confidential annexure 3 to the Concise Statement, the ACCC compares the number of visits to the Trivago website in which a consumer clicked on an offer located in the More Deals slide-out with the number of visits in which a consumer clicked on a Top Position Offer. The figures provided in confidential annexure 3 relate to the period from 1 December 2016 to 3 January 2018. It suffices to say that during this period the latter figure was much higher than the former.
31 In relation to the additional conduct allegations (i.e. the subject-matter of the last three declarations sought in the Originating Application), the Concise Statement includes the following allegations:
20 By:
(a) the advertising alleged in paragraphs 4 to 7, and by prominently displaying offers on the Trivago website as alleged in paragraphs 9 to 19 (including making the Top Position and Strike Through Representations) during the first relevant sub-period (First Price Comparison Conduct);
(b) the advertising alleged in paragraphs 6 and 8A, and by prominently displaying offers on the Trivago website during the second relevant sub-period as alleged in paragraphs 9 to 19 (including making the Top Position and Strike Through Representations) (Second Price Comparison Conduct);
(c) the advertising alleged in paragraphs 6 and 8A, and by prominently displaying offers on the Trivago website during the third relevant sub-period as alleged in paragraphs 9 to 19 (including making the Top Position, Strike-Through Representation and Red Price Representations) (Third Price Comparison Conduct); and/or
(d) the advertising alleged in paragraphs 6 and 8A, and by prominently displaying offers on the Trivago website during the fourth relevant sub-period as alleged in paragraphs 9 to 19 (including making the Top Position and Red Price Representations) (Fourth Price Comparison Conduct),
Trivago engaged in conduct that led or was likely to lead consumers to believe that Trivago's website provided an impartial, objective and transparent price comparison which would enable consumers to quickly and easily identify the cheapest available offer for a particular (or the "exact same") room at a particular hotel. In fact Trivago's website (a) did not enable consumers to quickly or easily identify the cheapest prices available for a particular hotel room; and (b) directed consumers to more prominently displayed offers made by advertisers which had made higher CPC bids than competing advertisers, irrespective of the prices offered to consumers.
32 I turn now to the Concise Response. The Concise Response includes the following description of Trivago's business:
5. trivago acts as a metasearch site and not as a direct booking site. trivago's primary function is to aggregate and compare accommodation offers from different online booking sites in a manner that consumers find helpful. The booking sites appearing on trivago's website include participating hotels and online travel agencies. If a consumer clicks on the booking site's offer on the trivago website, the consumer is taken to the booking site's online booking service and completes the booking using the booking site's service. trivago does not provide the booking service.
6. trivago's contractual terms require booking sites to pay trivago a fee if a consumer clicks on the booking site's offer on the trivago website (referred to as the "cost-per-click" or "CPC"). The CPC is trivago's principal source of revenue. trivago does not charge fees to consumers who use its service.
7. trivago's business offers booking sites a marketplace on which to advertise their hotel offers. The CPC payable by the booking site to trivago to advertise their hotel offer is the amount bid by the booking site on trivago's marketplace, subject to a minimum CPC determined by trivago.
33 The Concise Response describes changes that were made to the Trivago website during the Relevant Period. Many of these matters are reflected in the parties' statement of agreed facts, referred to later in these reasons.
34 The Concise Response includes certain admissions by Trivago. The relevant sections of the Concise Response are in the following terms:
C. Lowest rate statements
24. trivago admits that during the following periods, it described and marketed its Australian website in the following mediums and using statements to the following effect:
(a) between 1 December 2016 and 4 January 2018, as alleged by the ACCC, the trivago website stated:
"Find your ideal hotel for the best price";
and
"With trivago you can easily find your ideal hotel at the lowest rate. Simply enter where you want to go and your desired travel dates and let our hotel search engine compare accommodation prices for you.";
(b) between 1 December 2016 and 19 June 2017, as alleged by the ACCC, trivago caused the following statements to be made in the snippet which appeared beneath the Google search results displayed when Australian consumers conducted an online search for trivago:
"Compare over 250 booking sites and find the ideal hotel at the best price!";
and
"Compare hotels, find the cheapest price and guarantee the best deal on accommodation...";
(c) between 28 August 2016 and 29 May 2017, as alleged by the ACCC, trivago caused a television advertisement to be aired on television networks in Australia on 10,933 occasions stating:
"...there are so many different prices all over the internet. And trivago instantly compares them all to find your ideal hotel for the best price.";
(d) from 13 January 2017 to 29 May 2017, as alleged by the ACCC, trivago caused television advertisements to be aired on television networks in Australia on 4,761 occasions containing the following statements:
"trivago makes it easy for you to find the ideal hotel for the best price";
and
"You can be sure that you can find your ideal hotel at the best price";
and
"Remember, trivago shows you all the different prices for the exact same room. And that's how you can be sure that you find your ideal hotel for the best price."
25. trivago admits that the statements referred to in paragraph 24 (lowest rate statements) conveyed to ordinary consumers that:
(a) the trivago website is easy to use; and
(b) the trivago website assists consumers in finding their ideal hotel accommodation at the lowest rates advertised by a wide range of booking sites through the trivago website for that hotel on the relevant stay dates.
26. trivago says that, at all relevant times:
(a) the trivago website has been easy to use; and
(b) the trivago website has in fact assisted consumers in finding their ideal hotel accommodation at the lowest rates advertised by a wide range of booking sites through the trivago website for that hotel on the relevant stay dates.
27. However, for the purposes of this proceeding, trivago admits that:
(a) while the Initial Search Page Offers were selected by trivago from the lowest rates advertised by those booking sites on the trivago website for that hotel on the relevant stay dates, those rates were not always the lowest rates advertised on the trivago website for that hotel on the relevant stay dates;
(b) the lowest rate statements may have caused some consumers to form an erroneous belief that the Initial Search Page Offers were the lowest rates advertised on the trivago website for that hotel on the relevant stay dates; and
(c) to that extent, during the relevant period until 29 April 2018, trivago engaged in conduct in contravention of s 18 and s 34 of the Australian Consumer Law (ACL).
28. As noted above, from on or about 29 April 2018, trivago ceased making the lowest rate statements.
D Strike through pricing
29. trivago admits that, during the relevant period until on or about 20 November 2018, in response to a consumer search for accommodation in a particular region on particular stay dates, the initial search results page on trivago's website displayed, in respect of each hotel listed:
(a) a Strike-Through Price with a "hover-over" which stated: "This is the cheapest deal from the most expensive booking site with offers for this hotel on your stay dates."; and
(b) in the circumstances referred to earlier, a Percentage Savings box and a Top Deal box.
30. For the purposes of this proceeding, trivago admits that:
(a) while the Strike-Through Price for each hotel listed on the initial search results page was the lowest rate from the most expensive booking site with offers for that hotel on the relevant stay dates, the room rate did not always relate to the same room category as the Top Position Offer;
(b) by displaying the Strike-Through Price next to the Top Position Offer in the form it was displayed (using a "strike-through" notation) either on its own or in conjunction with the Percentage Savings box and the Top Deal box, trivago may have caused some consumers to form an erroneous belief that the Top Position Offer and the Strike-Through Price were offers for rooms in the same room category; and
(c) to that extent, by displaying the Strike-Through Price next to the Top Position Offer in the form it was displayed during the relevant period until on or about 20 November 2018 either on its own or in conjunction with the Percentage Savings box and the Top Deal box, trivago engaged in conduct in contravention of s 18 and s 29(1)(i) of the Australian Consumer Law (ACL).
31. As noted above, from on or about 20 November 2018, trivago altered the "hover-over" in respect of the Strike-Through Price to state that the price may relate to a room type or amenities package that differs from other offers on the site.
32. Further, from on or about 20 November 2018, trivago ceased using the "strike-through" notation and also removed the Percentage Savings box and the Top Deals box.