The UK Competition and Markets Authority (CMA) has announced a formal investigation into Hilton, InterContinental Hotels Group (IHG), Marriott, and CoStar, the owner of the hotel data analytics tool STR. The CMA is examining whether these businesses shared competitively sensitive information through STR and potentially facilitated coordination between rival hotel operators.
What's being investigated?
The CMA is assessing whether the hotel chains and analytics provider involved have infringed the Chapter I prohibition of the Competition Act 1998, which prohibits agreements or concerted practices that prevent, restrict, or distort competition. Where competitors share competitively sensitive information, this can be caught by the prohibition.
In this investigation, the CMA is examining whether STR’s benchmarking tools enabled the exchange of confidential data such as pricing, occupancy, and revenue trends. The concern is that the system may have provided competitors with granular, near real time insights into each other’s commercial strategies. Importantly, both the hotel chains and the provider of the system itself are under investigation.
At this stage, the CMA emphasises that no assumptions should be made about whether competition law has been infringed. The regulator will proceed through its evidence gathering phase.
Why now?
The investigation forms part of the CMA’s broader scrutiny of algorithms, analytics, and emerging technologies. Regulators are increasingly focused on whether third party data tools and digital platforms could facilitate coordination by increasing transparency around competitor activity. When competitors have access to detailed market information via a common platform, it may inadvertently or deliberately reduce uncertainty and make it easier for firms to anticipate one another’s behaviour without direct communication.
The CMA has, therefore, highlighted that data sharing platforms and algorithmic tools can create competition risks and indicated in its annual plan that it would be concerned if emerging technologies don't support fair competition...
Why this matters
Businesses across the sector should review their practices and consider whether they're compliant with competition law. Although benchmarking exercises can be legitimate if conducted properly, there are obvious competition law risks in very granular, detailed, frequent or unanonymised benchmarking reports.
Interestingly, the STR data analytics tool at the centre of this CMA investigation is also the subject of the US class action alleging price fixing by hotel chains.
Although the current investigation concerns the hotel sector, the implications extend across industries that rely on:
- Market benchmarking services
- Pricing algorithms
- Real-time analytics dashboards
- Data aggregation platforms
Organisations relying on such tools and the organisations providing them may face growing regulatory expectations around data governance, the granularity of information shared, and internal controls that prevent inadvertent exchange of competitively sensitive data.
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