FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission (ACCC) v Trivago N.V.
(No 2)  FCA 417
Trivago – an online search and price comparison platform for travel accommodation – was found to contravene Australian Consumer Law during the period from December 2016 to September 2019 and was fined on 22 April 2022 $44.7 million AUS for misleading consumers.
Trivago’s mission was to make it easy “to find the ideal hotel for the best price”. In their TV advertising, Trivago stated that they would quickly and easily identify the cheapest rates available for a hotel room responding to a consumer’s search and on their website they showed prices from a number of number of different online booking sites for a particular hotel where one price was presented in green, in a large font with a space around it (the Top Position Offer).
MISLEADING OR DECEPTIVE CONDUCT
In fact, the price that appeared as the Top Position Offer was in many cases not the cheapest offer for the particular hotel room (in 66.8% of Trivago’s listings).
- First, the Trivago website only displayed offers made by Online Booking Sites that had agreed to pay an amount of money – referred to as the Cost Per Click or “CPC” – to Trivago.
- Secondly, unless the CPC offered to be paid by the Online Booking Site exceeded a minimum threshold set by Trivago, the offer did not appear on the Trivago website.
- Thirdly, Trivago used an algorithm (the Top Position algorithm) to select the offer to appear as the Top Position Offer.
- Finally, a very significant factor in determining which offer would be the Top Position Offer was the amount of the CPC to be paid by the Online Booking Site (such as booking.com, EXPEDIA, Hotels.com, AIRBNB, VRBO, etc.) to Trivago.
A large number of consumers were affected by Trivago’s conduct. During the relevant period, there were approximately 111 million click-outs on the Trivago website. Approximately 104 million or 93% of the click-outs were on the Top Position Offer. There were approximately 57 million click-outs on a Top Position Offer for an identified hotel where the Top Position Offer was not the cheapest offer for that hotel. Trivago derived substantial revenue from its contravening conduct because it took advantage of consumers’ desire to find the best deal.
In its defence, Trivago argued that about 75% of its local revenue was eaten up by its advertising spend (which is its largest expense) and that it made “negative or very slim profit margins” on its Australian business between 2017-2020.
- $44.7 million AUS fine to be paid to the Commonwealth of Australia.
- For a period of 5 years, Trivago must refrain from engaging in such conduct.
- Trivago must bear ACCC’s legal costs.