The Full Federal Court has dismissed an appeal by Trivago against the Federal Court which found Trivago had breached the Australian Consumer Law by making misleading representations about hotel room rates on its website and in its television advertising. Our previous article on the Federal Court decision, which was the subject of the appeal can be found here.
In its decision, the Full Federal Court reaffirmed the Federal Court’s finding that Trivago did not sufficiently disclose to consumers that its website used an algorithm which gave prominence to accommodation providers based on their payment fees to Trivago (cost per click). The Full Federal Court upheld, that this conduct breached sections 18, 29(1)(i) and 34 of Australian Consumer Law. These sections prohibit suppliers of goods and services from engaging in conduct that is misleading or deceptive, from making misleading or false claims with respect to the pricing of goods or services, and finally from 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.
The Full Federal Court also supported the Federal Court’s finding that Trivago made misleading representations to its consumers through the use of strike through prices and text in different colours because Trivago often compared the rate for a standard room with the rate for a luxury room at the same hotel1.
ACCC Chair Rod Sims said the win to the ACCC sent a warning to price comparison sites about misleading consumers with the results recommendations.
“We brought this case because we were concerned that consumers were being misled by Trivago’s claims that their site was getting the best deal for consumers, when in fact they were shown the deals that benefited Trivago2.”
“Trivago’s conduct meant that consumers may have paid more for a room at a hotel than they should have, and hotels lost business from direct bookings despite offering a cheaper price.3“
The matter will now return to the primary judge to consider penalties. The maximum penalty for breaching the Australian Consumer Law in respect of these breaches is the greater of:
- $10,000,000;
- If the court can determine the value of the benefit that an organisation has obtained directly or indirectly from the breach—3 times the value of that benefit; and
- If the court cannot determine the value of that benefit—10% of the annual turnover of the organisation during the 12‑month period ending at the end of the month in which the act or omission occurred or started to occur4.
What does this mean for you?
The decision sends a stern warning to all businesses that use price comparison tools, to ensure their comparisons do not mislead consumers.
How can we help you?
HWL Ebsworth has a specialised Australian Consumer and Competition Law team that can assist your business with matters relating to the Australian Consumer Law.
This article was written by Teresa Torcasio, Partner, Laura Young, Partner and Chantelle Radwan, Solicitor.
1 Trivago N.V. v Australian Competition and Consumer Commission [2020] FCAFC 185, [252]-[263].
2 https://www.accc.gov.au/media-release/trivago-loses-appeal-after-misleading-consumers-over-hotel-ads
3 Ibid.
4 Schedule 2 of Competition and Consumer Act, s224(3A).
