8.1 Grounds 1-5 - Was there a Top Position Representation?
182 Grounds 1-5 challenge the making of the Top Position Representation at all, whereas grounds 6-11 challenge whether, if made, that it was misleading. The ACCC alleges that the Top Position Representation arose from the display of the Initial Search Results Page as to which the primary judge ruled as follows (at [213]):
In determining whether that representation was conveyed by Trivago, by the Trivago website, it is necessary to consider the online context as well as the formatting (including fonts and colours) used by Trivago on the website. The Top Position Offer was presented in the far right column, in green, and a relatively large font (compared with the other offers displayed on the Initial Search Results Page). It had white space around it, and there was a green "View Deal" button below it. The green colour has positive associations, suggesting that the consumer should go ahead with this offer. The overall impression was that the Top Position Offer was the best offer for the hotel, either in terms of price or some other characteristic. At least until 6 October 2017, there was no contrary indication on the Trivago website. In light of these matters, I consider that, at least until 6 October 2017, Trivago represented 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. Additional support for this finding is provided by some of the internal Trivago documents included in the Court Book, which indicate (as one would expect) an appreciation of the significance of formatting (including fonts and colours) (see, in particular, tabs 77, 85 and 162). For example, in the email at tab 77, an employee of Trivago wrote: "We know as a fact that changing the layout of prices, be it font sizes or colours, has a significant impact on user behaviour and, thus, on conversion."
183 The primary judge's approach, Trivago says, fails to apply the correct legal test. Instead, isolated and undue emphasis was placed on certain aspects of the display of the Top Position Offers while the context in which they appeared was ignored, including the available sorting mechanisms, and the clear and prominent display of equal and cheaper offers in the Second, Third or Fourth Position Offers and the More Deals button, and the other information readily available from the webpage.
184 Of central emphasis in Trivago's appeal was the question of whether the correct test was applied. Trivago contends that the primary judge erred at the outset of his analysis by failing to identify and apply the knowledge base to be attributed to the hypothetical, ordinary and reasonable member of the public looking to book accommodation online. Trivago argues that in this case, the ordinary and reasonable consumer can be expected to have knowledge of the following matters relevant to the alleged representations:
(a) there are various websites which provide online hotel and accommodation booking services, including both aggregator sites such as Booking.com, Hotels.com, Expedia.com, Agoda.com, Wotif.com and the Online Booking Sites themselves, that directly offer hotels or accommodation;
(b) there are various websites, such as Trivago's website, which aggregate offers from Online Booking Sites. Such sites do not provide booking services;
(c) in order to show accommodation, booking and aggregator sites require consumers to input search parameters which typically include location, number of travellers and dates of travel. These booking and aggregator sites then produce a set of search results showing offers which meet the search parameters;
(d) customers who visit these sites may do so in order to make a booking or to investigate available options, in terms of hotel, hotel attributes, and comparative prices. They would know from past experience that the prices offered by booking and aggregator sites may vary, as may applicable terms and conditions, such as payment date, cancellation policies, free WiFi, etc. They may be interested in accessing multiple sites to investigate and compare details of this kind;
(e) booking and aggregator sites have filtering tools which enable consumers to narrow or order the Initial Search Results Page, such as by reference to "price", "ratings" or "recommended";
(f) by clicking on the offers on the Initial Search Results Page, consumers can obtain further details about the offers from other booking sites, including photographs of the hotel and accommodation and non-price features, such as "free breakfast", "WiFi", whether the offer is refundable, and whether consumers are required to pay at the time of booking or on check-in. They will also note that they can click through to the actual hotel site, which is likely to provide photographs and information concerning the room, its amenities and the terms and conditions offered by the hotel (for example, cancellation policies, WiFi, the inclusion of breakfast etc); and
(g) consumers can also click on, or hover-over particular buttons or entries on the Trivago Initial Search Results Page to obtain further information. They are able to study the information outlined above while going backwards and forwards between other websites and links as they need.
185 Although the primary judge noted (at [213]) that there were alternative elements to the Top Position Representation, namely, if not the cheapest available offer for that hotel then alternatively, "some other characteristic which made it more attractive than any other available offer for that hotel", this finding was incorrect, Trivago says. This was because, contrary to the primary judge's conclusions, the notion that the Top Position Offer was the cheapest offer was defeated by the default sort (for example, our recommendations) and by the display of equal and cheaper offers next to the Top Position Offer. Separately from the More Deals button, equal or cheaper offers to the Top Position Offers were clearly and prominently displayed, Trivago says, in the Second, Third or Fourth Position Offers in the Relevant Period.
186 As to the sorting options on the Initial Search Results Page, Trivago says the primary judge took no account of this. At the hearing, it was put to Trivago that the sorting mechanisms only allowed a consumer to adjust the order of the various listings for different hotels produced by their search. The sorting mechanisms appeared to have no bearing on how different offers for the same hotel listing were displayed. Trivago appeared to accept this proposition with the qualification that the existence of the sort function indicates that Trivago is simply putting forward its recommendations to consumers, not some kind of absolute objective circumstance.
187 As to the position of the Top Position Offer, Trivago argues that the primary judge's analysis overlooks this matter, and it could not be sensibly argued that the ordinary and reasonable consumer would not notice the equal or cheaper prices displayed in the Second, Third and/or Fourth Position Offers. Trivago says those facts alone defeat the ACCC case to the effect that the Top Position Representation was conveyed by the prominent display of all Top Position Offers on the Trivago website during the Relevant Period.
188 Additionally, for most of the Relevant Period, (from 5 December 2017 to 13 September 2019), equal or cheaper offers to the Top Position Offer were displayed on the More Deals button. The More Deals button clearly and prominently displayed equal or cheaper offers frequently. The fact that the More Deals button often provided for lower prices than the Top Position Offer was clearly stated in the text accessed through the Our Recommendations information button.
189 Trivago says the primary judge wrongly discounted this clear disclosure. It argues that the analysis adopted by his Honour does not withstand scrutiny for several reasons:
(a) first, the primary judge applied the wrong legal test. Rather than considering whether the alleged representation would be conveyed to the ordinary and reasonable member of the target audience, the primary judge approached the matter from the perspective of "some, perhaps many" consumers (at [217]);
(b) secondly, the clear and prominent display of equal and cheaper prices in the More Deals button would not be overlooked by the ordinary and reasonable consumer merely because prices were in a different colour and column to the display of the Top Position Offers. While it may be accepted that the colour green has positive associations, as the primary judge concluded, it does not follow that the ordinary and reasonable consumer would not observe, or would disregard, the adjacent prices or the prices in the More Deals button. Trivago says this is not a fine print case; and
(c) thirdly, Trivago argues the primary judge's proposition that consumers who observe the display of equal and cheaper prices in the More Deals button would nonetheless have understood that the Top Position Offer was "either the cheapest offer" or had "some characteristic which made it more attractive than any other offer for the hotel" is illogical. It could not be the former, nor could it only be the latter, Trivago says. Once the ordinary and reasonable consumer observed equal and cheaper prices in the adjacent Second, Third or Fourth Position Offers or the More Deals button, he or she could not have implied, and could not have understood, that the Top Position Offer was the cheapest.
190 Trivago's argument that the primary judge applied the wrong test appears to ignore what his Honour said (at [192]) regarding the relevant class of consumers which is repeated for convenience:
Relevant class of consumers
The relevant class of consumers for present purposes is those members of the public looking to book accommodation online. It may be expected that ordinary and reasonable members of this class of consumers have some familiarity with using the internet and making bookings (whether for accommodation or other products or services) online. I would not assume that such consumers have used the Trivago website before or that they have booked accommodation online before. I note that the relevant class is very large, as indicated by the figures set out in [88] above. While those figures do not state the number of consumers who accessed the Trivago website, they indicate that there were a large number of sessions on the website. For example, in the period 1 December 2016 to 3 January 2018, there were 20,039,530 sessions on the Trivago website where the Top Position Offer for any hotel listing was clicked. The evidence does not establish how long consumers are likely to spend on the Trivago website. The First Parkes Report refers at [131] to a study called "TripAdvisor Insights" which found that the average hotel purchaser spends 191.4 minutes researching online and visits 34 sites before making a purchase. Professor Parkes did not himself carry out a study about this matter and there is a question as to the weight that can be ascribed to it. In any event, I consider it unlikely that many consumers would spend this period of time (or anything approaching it) on the Trivago website. The whole point of the Trivago website, as explained in Trivago's advertising (see, for example, the television advertisement at [3] above) was to save the consumer time by not needing to search many different websites. Further, Professor Slonim's evidence regarding 'satisficers' suggests that many consumers are likely to interact only briefly with the website.
(Emphasis added.)
191 True it is that the primary judge subsequently (at [217] referred to "some or possibly many" users, but this was clearly a reference to the relevant class of consumers within those identified in the passage above. This reference did no more than eliminate a de minimis quantity. Although his Honour has incorrectly and unnecessarily added a further gloss to the analysis, this has no effect at all on the substance of his Honour's reasoning. These words must be read in the context of the specific assessment set out at [192].
192 Since the primary judge delivered his decision, the Full Court has (recently) and, with respect correctly, clearly articulated the appropriate test in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2020] FCAFC 130 per Wigney, O'Bryan and Jackson JJ, where their Honours said (at [23]):
The primary judge referred to a further or alternative test for whether conduct that is directed to the public generally or a section of the public is misleading: whether a significant number of persons to whom the conduct is directed would be led into error (PJ at [41] and [42]). On the appeal, TPG relied on the test, submitting that it is necessary for the ACCC to show that a "not insignificant number" of reasonable persons within the relevant class of persons (prospective purchasers of TPG's services) have been misled or deceived or are likely to be misled or deceived. No substantive argument was directed to the correctness of that test by the ACCC and our decision in this appeal does not turn upon it. Nevertheless, we consider it appropriate to record our view that the test is, at best, superfluous to the principles stated by the High Court in Puxu, Campomar and Google Inc and, at worst, an erroneous gloss on the statutory provision. We make the following brief observations:
(a) The origin of the "significant number" test can be traced back to decisions of Franki J in Weitmann v Katies Ltd (1977) 29 FLR 336 (at 343) and Wilcox J (as a member of a Full Court) in 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 (at 302). In both cases, the test appears to have been formulated by adoption of principles applied in the law of passing off. However, it has long been settled that the proper construction of s 18 is not controlled by analogous common law or statutory remedies: see, for example, World Series Cricket v Parish (1977) 16 ALR 181 at pp 198-199 per Brennan J (as a judge of the Federal Court), referred to with approval in Puxu at p 198 per Gibbs CJ and at 204-205 per Mason J, and Campomar at [97].
(b) The test has never been embraced by the High Court. As early as 1981 in Puxu, the High Court formulated the relevant question as the effect of the impugned conduct on reasonable or ordinary members of the class of persons to whom the conduct was directed: see at 199 per Gibbs CJ and 210 per Mason J. In the High Court cases that have followed Puxu, particularly Campomar and Google, the test has always been stated in substantially the same terms.
(c) The correctness of the "significant number" test was doubted by Finkelstein J at first instance in Australian Securities and Investments Commission v National Exchange Pty Ltd [2003] FCA 955; 202 ALR 24 at [11] and, a short time later in .au Domain Administration v Domain Names Australia Pty Ltd [2004] FCA 424; 207 ALR 521 at [22]-[26], Finkelstein J concluded that the test had been overtaken by the test stated by the High Court in Campomar. In the appeal from the National Exchange decision, the Full Court expressed the view that the "significant number" test was merely an alternative way of expressing the test stated by the High Court in Campomar: National Exchange Pty Ltd v Australian Securities and Investment Commission [2004] FCAFC 90; 49 ACSR 369 (National Exchange) at [23] per Dowsett J and at [70] per Jacobson and Bennett JJ.
(d) Despite the view expressed by the Full Court in National Exchange, the "significant number" test has been referred to and applied in a number of cases in the Federal Court, often in the context of "passing off" type cases. In particular, the test was applied by Tamberlin and Siopis JJ in Hansen Beverage Company v Bickfords (Australia) Pty Ltd (2008) 171 FCR 579 at [45]-[48], by Greenwood J in Bodum v DKSH Australia Pty Ltd [2011] FCAFC 98; 280 ALR 639 at [209] (with whom Tracey J agreed), and by Greenwood, Logan and Yates JJ in Global One Mobile Entertainment Pty Ltd v ACCC [2012] FCAFC 134 at [108], [111]. But these cases did not resolve the question whether it was a different and additional test to the principles stated by the High Court.
(e) More recently, in Flexopack SA Plastics Industry v Flexopack Australia Pty Ltd [2016] FCA 235; 118 IPR 239, Beach J made passing reference to the test, stating that he was inclined to the view that if, applying the Campomar test, reasonable members of the class would be likely to be misled, then such a finding carries with it that a significant proportion of the class would be likely to be misled (at [270]). But later, in Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liquidation) (No 2) [2017] FCA 709 at [42] and in Australian Securities and Investments Commission v Westpac Banking Corporation (No 2)(2018) 266 FCR 147 at [2279], his Honour said he had become inclined to the view that a finding that reasonable members of the class would be likely to be misled does not necessarily carry with it that a significant proportion of the class would be likely to be misled, so that a finding of a "not insignificant number" of members of the class being likely to be misled is an additional requirement that needs to be satisfied.
(f) Respectfully, we disagree. Whether or not speaking of a reasonable member of a class implies as a matter of strict logical necessity that one is speaking of a significant proportion of that class (cf. Dowsett J in National Exchange at [23]), nothing in the language of the statute requires the court to determine the size of any such proportion. We would emphasise the point that Dowsett J made in National Exchange at [24] that the test of reasonableness involves the recognition of the boundaries within which reasonable responses will fall. In our view it does not require any attempt to quantify, even approximately, the hypothetical reasonable individuals who have a particular response. The idea that such quantification is possible will almost always be an illusion, and illustrates how the test of "a not insignificant number" distracts from the terms of the statutory prohibition and the guidelines to its application laid down in Campomar.
(g) While, in our view, s 18 of the ACL (and analogous provisions) do not require the satisfaction of the "significant number" test in order to establish contravention, a party may choose to put its particular case that way. That is, it is open for a party to seek to establish that conduct is misleading by establishing that persons were in fact misled, and in such cases it may be necessary to establish that the number of such persons was significant in order to persuade the court that the conduct was misleading or deceptive or likely to mislead or deceive: see National Exchange at [23]. But that will be a function of how the case is put; it is not a requirement inherent in the statute.
193 As this comprehensive passage (relying on High Court authority) in TPG is correct, it is unnecessary to refer to additional authority. However and for the same reason, just as the application in TPG of the wrong test at first instance made no difference to the Full Court's determination, it does not in this case either.
194 While dealing with TPG, it is convenient on a slightly different point to touch upon the question of qualifications to statements made in communications. In TPG, the Full Court said (at [25]):
A question that commonly arises is whether a publication or communication is misleading when it contains a misleading statement in one place but also contains another statement, perhaps in a different place in the publication or communication, which remedies the misleading character of the first statement. Ultimately, the question is one of overall assessment of the publication or communication. The correct approach was summarised by Edelman J in Australian Competition and Consumer Commission v Valve Corp (No 3) [2016] FCA 196; 337 ALR 647 (at [214]) (upheld in Valve Corp v Australian Competition and Consumer Commission (2017) 258 FCR 190, noting that there was no challenge to his Honour's relevant statements of principle (recorded at [158]):
One consequence of the need to consider the conduct in light of all relevant circumstances is that any allegedly misleading representation must be read together with any qualifications and corrections to that statement. Hence, although a qualification to a statement might be effective to neutralise an otherwise misleading representation, this might not always be so, particularly if the misleading representation is prominent but the qualification (often linked to the representation by an asterisk) is not: Medical Benefits Fund of Australia Limited v Cassidy [2003] FCAFC 289; (2003) 135 FCR 1, 17 [37] (Stone J). As Keane JA expressed the point, the qualifications must have "the effect of erasing whatever is misleading in the conduct": Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 [83].
(Emphasis added.)
195 It is appropriate, therefore, to address the characteristics of ordinary and reasonable consumers in the manner asserted by Trivago. It is also however true, as the ACCC contends, that the list of attributes advanced by Trivago is incomplete and selective so as to support the Trivago case.
196 It is correct, as the ACCC contends, that to those characteristics one would add that ordinarily, reasonable users of search engines know that no humans intervene between the entry of a search query and a return of a list of results. Such users understand search results to be a ranked list that corresponds to the search terms or parameters that they have entered. They understand that search engines automatically rank results in an order that is likely to be optimal for the searcher. The first ranked result is, or is likely to be, the most relevant result with subsequent results progressively less relevant. Secondly, the fact that consumers "are able to take time", as contended for Trivago, to study information does not accord with the conclusion, which his Honour was perfectly entitled to reach on the evidence adduced before him, that in reality consumers make quick decisions on the Trivago website. More will be said on this below.
197 Taking into account these additions to the knowledge base, any ordinary and reasonable consumer using this service would conclude that the Top Position Offer was the cheapest available offer conforming to the search terms or parameters entered by the consumer, or an offer other than the cheapest offer which held some other characteristic which would make it more attractive to that consumer than other available offers.
198 Trivago argues that the Top Position Representation is inconsistent with the various contextual matters which it emphasises, including the Our Recommendations information button hover-over and the link to the "Learn how Trivago works" page. It says that the ordinary and reasonable consumer can be taken to be familiar with these standard ways in which additional information can be obtained when searching for accommodation online and will take all of these contextual matters into account. It draws on observations in Australian Competition and Consumer Commission v Jetstar Airways Pty Ltd [2015] FCA 1263 per Foster J (at [33], [163], [164], [168] and [174]). Trivago argues that in finding to the contrary, the primary judge adopted an unrealistic and unsound approach to the operation of websites such as this as if they were fleeting advertisements that could not be closely considered. That information is delivered sequentially, and not as though it was all on one page at once, is an important and valid point made by Trivago. It is fair to say that the totality of information needs to be evaluated, but it may be that different degrees of importance are attached to the different sources of information based in part on their positioning in the context of the website as a whole.
199 Trivago complained about the primary judge's "erroneous" rejection of Professor Parkes' expert opinion that consumers looking for a hotel room are known to search extensively on multiple platforms before purchasing, referencing one study that placed the average hotel purchaser spending 191.4 minutes researching online and visiting 34 sites before making a purchase. Trivago complains that the primary judge preferred 'his personal subjective opinion' on this topic that it was unlikely that many consumers would spend this period of time or anything approaching it on searches involving the Trivago website.
200 Trivago acknowledges that the primary judge did additionally mention the evidence from Professor Slonim regarding "satisficers", but seems to have overlooked the fact, Trivago says, that this evidence was based upon a false assumption that consumers would have to pay the full price of booking a room when they made the booking. Trivago notes that the primary judge queried whether the statements in the hover-over would be sufficient to dispel the impression created by the Top Position Offer because consumers may not place their mouse over the Our Recommendations information button and may not see the hover-over.
201 However, Trivago says that without answering this question, and without taking into account the fact that the adjacent Second, Third, and Fourth Position Offers were often equal to or lower than the Top Position Offer, the primary judge dismissed the hover-overs as being "opaque and insufficient" as they refer to "compensation paid to the booking site", but did not explicitly state that compensation was being paid to Trivago. The primary judge also added that the word "compensation" does not really convey the nature of the CPC mechanism and did not "clearly disclose the significance of the CPC in the selection of the Top Position Offer".
202 Trivago says this approach was misdirected. It was not necessary, Trivago argues, to disclose either the nature of the CPC mechanism or the significance of the CPC in the Trivago Algorithm in order to dispel the alleged Top Position Representation. Rather, the issue was whether the contextual statements would dispel any notion or potential implication that an ordinary and reasonable consumer might arrive at, that the Top Position Offers were the cheapest offers for that hotel or had some other characteristic which made them more attractive than any other offer for that hotel. The primary judge failed to grapple with the correct question, Trivago contends.
203 The essential argument for Trivago is that properly analysed, both elements of the alleged Top Position Representation, if they existed, were dispelled by the listed disclosures. Those disclosures convey that Top Position Offers were selected having regard to a range of matters which included price and compensation paid by Online Booking Sites. In this regard, and contrary to the primary judge's finding, Trivago says the ordinary and reasonable consumer would understand that it was compensation paid to Trivago. Expressly stated in what Trivago describes as being prominent text "How payments to us affect ranking" as well as in the "Learn how Trivago works" page of the Trivago website, which stated: "We also take into account the compensation booking sites provide us with when a user clicks on an offer".
204 Trivago says that taking all these matters into account, the ordinary and reasonable consumer would not have construed the Trivago website in the absolute sense of the Top Position Representation as contended for by the ACCC and found by the primary judge. Rather, such a consumer would have understood that the Top Position Offers were put forward as Trivago's recommended offers, not because they were always the cheapest offers, as that was denied on the face of the website, but because in Trivago's assessment they were the most attractive and relevant to consumers. Additional information that was readily accessible through the "Our Recommendations" information button and associated links explicitly confirmed this to be the case.
205 While the Court, on appeal, does not have the benefit of seeing the experts give evidence in person before the primary judge, it does have the same opportunity to evaluate the content of the Trivago website and advertising that was available to the primary judge.
206 On this issue, (but for the reference to a not insignificant number in Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 2) [2017] FCA 709), no exception was taken to the statements of principle set out by the primary judge (at [185]-[188]) to the following effect:
185 In relation to the first step, in Australian Competition and Consumer Commission v Jetstar Airways Pty Ltd [2015] FCA 1263, in the context of ss 18 and 29(1)(i) and (m) of the Australian Consumer Law, Foster J noted at [39] that where a headline representation is sought to be qualified by other material, the qualifying material must be sufficiently prominent to prevent the headline representation being misleading. The degree of prominence required will vary with the potential of the primary statement to be misleading (citing Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at [37]-[41] per Stone J, Moore and Mansfield JJ agreeing). In this regard, it is the overall impression created by the representation that must be assessed.
186 The second step involves an objective determination by the Court of the effect of the representations on the ordinary or reasonable members of the class of consumers to whom the conduct is directed: Campomar at [102]; Google at [7] per French CJ, Crennan and Kiefel JJ. Conduct is misleading or deceptive, or likely to mislead or deceive, if it has a tendency to lead into error: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 (TPG) at [39] per French CJ, Crennan, Bell and Keane JJ. As Allsop CJ held in Coles at [39], "[t]he causing of confusion or questioning is insufficient; it is necessary to establish that the ordinary or reasonable consumer is likely to be led into error." As this passage indicates, and as the High Court held in Campomar at [105], the focus of the inquiry is on the meaning that would be conveyed to a hypothetical ordinary or reasonable member of the relevant class of consumers. In that context, it is relevant to consider: whether any of the alleged reactions are extreme or fanciful such that they should not be attributed to the ordinary or reasonable members of the class of consumers (Campomar at [105]; REA Group Limited v Fairfax Media Limited [2017] FCA 91 at [18] per Murphy J); and whether a not insignificant number of consumers are likely to have been led into error (Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 2) [2017] FCA 709 at [42] per Beach J; Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) (2018) 266 FCR 147 at [2279] per Beach J).
187 Whether conduct in relation to a particular class of consumers is misleading or deceptive is a question of fact to be resolved by a consideration of the whole of the impugned conduct in the circumstances in which it occurred: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [24]-[25] per French CJ, at [102] per Gummow, Hayne, Heydon and Kiefel JJ; TPG at [49]; Aldi Foods Pty Ltd v Moroccanoil Israel Ltd (2018) 261 FCR 301 at [74] per Perram J.
188 In TPG, French CJ, Crennan, Bell and Keane JJ observed at [50] that misleading or deceptive conduct may occur, not only when a contract has been concluded under the influence of a misleading advertisement, but also at the point where members of the target audience have been enticed into "the marketing web" by an erroneous belief engendered by an advertiser, even if the consumer may come to appreciate the true position before a transaction is concluded.
(Emphasis added.)
207 Having regard to the approach indicated by these cases, can it be said that any of the matters relied upon by Trivago negated a dominant message on its website to the effect that the Top Position Offers were the best offers for particular hotels either in terms of price or some other characteristic?
208 The features of the Trivago website, to the extent they may diminish either limb of the Top Position Representation were not adequate in the overall sense required, as discussed for example, in Australian Competition and Consumer Commission v Valve Corporation (No 3) (2016) 337 ALR 647; [2016] FCA 196 per Edelman J (at [214], [244]-[245] and [251]-[256]). The suggestion that the representation can be qualified by the hovering of a cursor over the information button, which will produce text was quite appropriately regarded by the primary judge as being insufficient to qualify the representation. From 6 August 2017, the Recommendations information button hover-over stated, amongst other things:
In determining the price to display in the leading position of our search results, we consider a variety of factors, including price, the likelihood that you will find your ideal hotel, your ability to complete a booking after you click on a search result and the level of compensation provided by the booking sites we cover. In order to make more information available on pricing options to our users, additional prices are listed in the "More deals" slide-out.
209 For the remainder of the Relevant Period, from 27 January 2018 until about October 2018, the text of the hover-over read:
The ranking results reflect your search criteria and our assessment of the attractiveness of the offer compared to other offers available on our site. It also reflects the compensation paid by the booking site. Learn how Trivago works.
(Emphasis in the original.)
210 Since about 17 April 2019, directly next to the Our Recommendations information button the Trivago website stated in prominent text "How payments to us affect ranking". If hovered over, this entry would take one to the text extract in the previous paragraph. Since on or about 3 July 2018, further information was provided by a hyperlink to a "learn how Trivago works" page. Trivago argues that the alleged Top Position Representation is inconsistent with these contextual matters.
211 It is not possible to be satisfied that the Top Position Representation was dispelled, as Trivago contends, by any of the specific factors to which Trivago refers, namely, the listing of cheaper prices in the Second, Third and Fourth Position Offers (the frequency of which Trivago has exaggerated on appeal); the existence of the "More Deals" button; the description of results as a "default sort"; or the addition of attempted qualifications.
212 Contrary to Trivago's submissions, it was not "often" the case that there were cheaper prices displayed, indeed, in many cases there were no prices displayed which were cheaper than the price of the Top Position Offer among the other prices listed in the initial offers. The statement of agreed facts and its annexures made this clear. It was frequently not the case that information displayed to consumers was capable of displacing the Top Position Representation. There were occasionally lower prices shown among the initial offers, but they were displayed less prominently and less attractively than the Top Position Offer.
213 The primary judge accepted the expert evidence, as he was entitled to do, in relation to "satisficers", who were subject to "present" and "loss aversion" biases, who were unlikely to notice or attach significance to occasional lower prices displayed in this way. The primary judge expressly accepted, as his Honour was entitled to do, (at [158(g)]) that most people (including those referred to in the Professor Slonim's report as "satisficers") who face too many options, rather than proceeding to a more intense search, instead succumb to decision paralysis and accept the first choice that meets their inflexible attribute needs (location, dates, number of people) and is acceptable to (i.e., satisfies) their other preferences. For instance, if the price is within some range of acceptability (e.g., under $200 or under $300) and the room has two beds, then they will be satisfied with the choice and proceed to book the room. His Honour also accepted the reasons given for this behaviour as follows (at [158(g)]):
… First, once a consumer finds an initial accommodation that is satisfactory, any rooms that might be found with a further search are unlikely to be evaluated as better due to loss aversion given that there is a high likelihood that even if some attributes are better with the alternative room, other attributes are likely worse, and thus a loss on these attributes will receive greater weight in the evaluation. Secondly, consumers in many cases may not believe that they will be able to find a better deal, either because they do not think that they have the skill, or that it will take too much time to find a potentially better deal (present bias), or that there is not a better deal to be found if they search further. Moreover, in many decision-making situations, consumers often stay with defaults such as the first option they become aware of that is satisfactory (known as a status quo bias) because they lack confidence that another option might actually be a better deal.
214 It was entirely open to the primary judge to be satisfied as to this evidence. There is no reason to think that it is not plausible. His Honour also had the benefit of evaluating the evidence given viva voce.
215 In relation to the More Deals button, until 5 December 2017, that button did not display an offer price at all. So, again, it conveyed no information capable of displacing the Top Position Representation. After that date, it did display the cheapest priced hotel room offer from an Online Booking Site that had met Trivago's minimum CPC threshold. In many cases, that price was not lower than the price of the Top Position Offer and so it was not capable of displacing any Top Position Representation.
216 Additionally, the More Deals offer would not necessarily be the lowest available price because if an Online Booking Site had made a CPC bid for an offer with a cheaper price than the Top Position Offer, but had not exceeded Trivago's minimum CPC threshold, the offer was simply not displayed by Trivago at all. Trivago's argument entirely glosses over this fundamental factor.
217 On appeal this Court also forms a view as to whether the initial qualifications added by Trivago to the website from October 2018 were effective. They were not. They were only visible to that subset of consumers who came across them by hovering a mouse cursor over the relevant text. Otherwise, there was nothing indicating even the existence of any hover-over text which might alert consumers to the fact that there was some important qualification to an otherwise attractively displayed price. Further, the primary judge's characterisation of Trivago's qualifications as "opaque and insufficient" (at [216]) were correct.
218 The qualifications mysteriously describe CPC bids as being the level of "compensation" provided by booking sites without identifying to whom the compensation was paid, or disclosing how they influenced the choice of offers to the consumer. In this context the word "compensation" is an ambiguous one which fails to state clearly the character of the CPC as a fee which booking sites paid to Trivago in order to be eligible to be displayed in Trivago's search results. The qualifications set out on the "Learn how Trivago works" page (see [46(b)] above) did not advance this position. In each instance, the reference to the compensation Trivago would receive was listed at the end of the text, preceded by reference to the "variety of factors" or the "number of relevant factors" that are used to determine the Top Position Offer. Framed in this way, the qualification failed to disclose the significant role the CPC had in the calculation of the Top Position Offer, being at least the second most important factor on the evidence of Professor Parkes.
219 Trivago submits that it was not necessary for it to disclose either the nature of the CPC mechanism or the significance of the CPC in Trivago's Algorithm. It was sufficient, it says, simply for the contextual statements contained in the hover-overs to dispel any notion or potential implication that an ordinary and reasonable consumer might have that the Top Position Offers were the cheapest offer for that hotel or had some characteristic which made them more attractive than any other offer for that hotel. Trivago says that the primary judge failed to address the correct question in this regard.
220 This submission cannot be accepted. The primary judge identified the correct question (at [216]) as being "whether any statement contained in the hover-over would be sufficient to dispel the impression created by the Top Position Offer …" (Emphasis added.). Given the nature of the Top Position Representation, and the role of the CPC in determining the Top Position Offer, it is difficult to see how the representation could have been dispelled without a more detailed disclosure of the CPC. This is particularly so because, as has been laboured in these reasons and by the primary judge, Trivago's minimum CPC threshold excluded certain, and potentially cheaper or more attractive offers from even appearing on its website.
221 It is difficult to escape the conclusion that Trivago chose to use unclear language to avoid providing clear and accurate information to consumers as to the importance of the CPC mechanism in displaying offers.
222 The suggestion that consumers understood Trivago to be giving an "opinion" as to what it believed to be the cheapest or best offer, rather than conveying a message of objective fact is entirely unfounded. Clearly, users of a search engine expect that the results displayed to them have been ranked and arranged in response to their search inputs and other relevant attributes of the hotel room, such that an objective assessment of the available offers is presented. Consumers would not anticipate that Trivago was expressing an opinion as to which was the most suitable hotel. There was no human intervention as consumers would well understand. Consumers would certainly not understand that the Top Position Offer was determined to a significant degree (substantially understated by Trivago on appeal) by the value of the CPC bids made by Online Booking Sites. A consumer would simply never anticipate that the quantum of a CPC bid had anything to do with his or her search query, and as the primary judge correctly found in this instance (at [177]), the contention that the CPC acted as a proxy for the quality and attractiveness of an offer was entirely unpersuasive.
223 Trivago has also submitted that the primary judge was expressing his personal subjective opinion about the amount of time consumers were likely to spend on the Trivago website. Again this is not so. As indicated, the primary judge adopted expert evidence suggesting to the contrary, evidence which was entirely open to him to accept and entirely plausible. Indeed, the suggestion that consumers would spend hours booking accommodation and look at dozens of sites is not only contrary to common sense, but inconsistent with Trivago's very advertising - its raison d'être - which offered consumers the ability to easily and "instantly" compare prices, thereby obviating the need to spend hours browsing from site to site.
224 In short, there was no reason at all for a consumer to anticipate that there was any correlation between the value of a CPC bid by an Online Booking Site and the attractiveness (or, for that matter, relevance) of an offer to a person conducting a search via the Trivago website. Not that consumers know anything at all about CPC bids, nor did the general references to "compensation" in the hover-overs provide any meaningful information about the significant role they played in determining the Top Position Offer so as to dispel the Top Position Representation.
225 The Top Position Representation, as pleaded, was established. These grounds of appeal cannot succeed.