Australian Competition and Consumer Commission v Trivago N.V.
[2020] FCA 16
•20 January 2020
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Trivago N.V. [2020] FCA 16
File number: VID 1034 of 2018 Judge: MOSHINSKY J Date of judgment: 20 January 2020 Catchwords: CONSUMER LAW – misleading or deceptive conduct – where the respondent conducted an online search and price comparison platform for travel accommodation – where the respondent’s television advertisements stated that the respondent made it easy “to find the ideal hotel for the best price” – where the website presented prices from a number of different online booking sites for a particular hotel – where one price was presented in green, in a large font with space around it (the Top Position Offer) – where the expert evidence at trial established that in approximately 66% of listings, higher priced offers were selected as the Top Position Offer over alternative lower priced offers – whether the respondent made each of the alleged representations – whether, if the representations were made, they were misleading or deceptive Legislation: Competition and Consumer Act 2010 (Cth), ss 4, 5, 155, Sch 2, Australian Consumer Law, ss 18, 29, 34
Evidence Act 1995 (Cth), ss 79, 81, 136, 140
Federal Court Rules 2011, r 5.04
Cases cited: Aldi Foods Pty Ltd v Moroccanoil Israel Ltd (2018) 261 FCR 301
Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2014) 317 ALR 73
Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 2) [2017] FCA 709
Australian Competition and Consumer Commission v Jetstar Airways Pty Ltd [2015] FCA 1263
Australian Competition and Consumer Commission v Meriton Property Services Pty Ltd (2017) 350 ALR 494
Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640
Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) (2018) 266 FCR 147
Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45
Cat Media Pty Ltd v Opti-Healthcare Pty Ltd [2003] ASAL 55-103; [2003] FCA 133
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588
Domain Names Australia Pty Ltd v .au Domain Administration Ltd (2004) 139 FCR 215
Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1
Optus Mobile Pty Ltd v Telstra Corporation Ltd [2018] FCA 745
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
REA Group Ltd v Fairfax Media Ltd [2017] FCA 91
Reckitt Benckiser (Australia) Pty Limited v Procter & Gamble Australia Pty Ltd [2015] FCA 753
Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177
Date of hearing: 9, 10, 11, 12 and 13 September 2019 Registry: Victoria Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 278 Counsel for the Applicant: Mr N O’Bryan AM SC with Mr Z de Kievit Solicitor for the Applicant: Corrs Chambers Westgarth Counsel for the Respondent: Mr N Young QC with Mr N De Young Solicitor for the Respondent: King & Wood Mallesons ORDERS
VID 1034 of 2018 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
AND: TRIVAGO N.V.
Respondent
JUDGE:
MOSHINSKY J
DATE OF ORDER:
20 JANUARY 2020
THE COURT ORDERS THAT:
1.The orders made on 19 September 2019 (which relate to confidentiality) be varied to the extent necessary to enable the material in the reasons for judgment to be published.
2.The matter be listed for a case management hearing on a date to be fixed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MOSHINSKY J:
INTRODUCTION
[1]
THE ORIGINATING APPLICATION, THE CONCISE STATEMENT AND THE CONCISE RESPONSE
[16]
THE HEARING
[35]
FACTUAL FINDINGS
[43]
Trivago
[44]
Trivago’s advertising and marketing
[46]
The Trivago website
[53]
The first relevant sub-period (1 December 2016 to 29 April 2018)
[62]
The second relevant sub-period (29 April 2018 to 20 November 2018)
[69]
The third relevant sub-period (20 November 2018 to 13 February 2019)
[74]
The fourth relevant sub-period (13 February to 13 September 2019)
[78]
The KWM September 2017 letter and Trivago’s Response to the ACCC
[82]
FINDINGS IN RELATION TO THE COMPUTER SCIENCE EXPERT EVIDENCE
[91]
Question 1: Making reference to the source code, pseudocode and written descriptions in the documents provided, provide a brief, high-level description of how the Top Position and Default Sorting algorithms operate
[97]
Question 2: What factors influence whether an offer is selected as the Top Position Offer?
[104]
Question 3: What is the weighting or relative importance of these factors?
[106]
Question 4: How and to what extent (if any) does the Top Position offer algorithm filter certain offers made by advertisers?
[122]
Question 5: How important is an advertiser’s CPC payment in determining the Top Position Offer?
[123]
Question 6: How frequently are higher priced hotel offers selected as the Top Position Offer over alternative, lower priced offers? In these cases (if any), what factor primarily determines why a higher priced offer is selected over a lower-priced offer?
[125]
Question 7: What percentage of listings had a Top Position Offer with the highest CPC of all offers within that listing? Further, how does CPC generally relate to offer price?
[129]
Question 8: What percentage of listings had a Top Position Offer with the cheapest price offer of all offers within that listing? What percentage of listings had a Top Position Offer within 1% or 5% of the cheapest offer of all offers within that listing?
[131]
Question 9: Considering only listings where the Top Position Offer was not the cheapest price offer of all offers within that listing, what percentage of the Top Position Offers had a CPC value higher than the cheapest offer? Further, what are the other factors by which the Top Position Offer and cheapest price offer differ?
[134]
FINDINGS IN RELATION TO CONSUMER BEHAVIOUR EVIDENCE
[146]
Evidentiary ruling
[146]
Professor Slonim’s evidence
[156]
FINDINGS IN RELATION TO ECONOMIC EVIDENCE
[160]
Evidentiary ruling
[160]
Mr Smith’s evidence
[168]
APPLICABLE PRINCIPLES
[178]
APPLICATION OF PRINCIPLES TO THE FACTS OF THIS CASE
[190]
Relevant class of consumers
[192]
The first relevant sub-period
[193]
Cheapest Price Representation
[196]
Strike-Through Representation
[206]
Top Position Representation
[212]
Additional conduct allegations
[223]
The second relevant sub-period
[226]
Strike-Through Representation
[227]
Top Position Representation
[233]
Additional conduct allegations
[244]
The third relevant sub-period
[249]
Strike-Through Representation
[250]
Red Price Representation
[255]
Top Position Representation
[262]
Additional conduct allegations
[264]
The fourth relevant sub-period
[265]
Red Price Representation
[266]
Top Position Representation
[274]
Additional conduct allegations
[277]
CONCLUSION
[278]
INTRODUCTION
The respondent, Trivago N.V. (Trivago), is incorporated in the Netherlands. It carries on business in Australia by conducting an online search and price comparison platform for travel accommodation. Trivago uses the website address “ for Australian consumers (the Trivago website).
The applicant (the ACCC) alleges that Trivago engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law). The ACCC also alleges that Trivago contravened ss 29 and 34 of the Australian Consumer Law (set out later in these reasons). The ACCC’s case relates to the period from 1 December 2016 to 13 September 2019 (the Relevant Period).
Trivago conducted a television advertising campaign in the first part of the Relevant Period. Many of these advertisements contained a statement to the effect that Trivago makes it easy “to find the ideal hotel for the best price”. For example, in one of the television advertisements, which was aired on Australian television networks between 10 January 2016 and 26 September 2017, the presenter (pictured below, in an image from the advertisement) stated as follows:
Have you ever looked for a hotel online?
Did you notice that there are so many different prices out there for the exact same room?
Trivago does the work for you and instantly compares the prices of over 600,000 hotels from over 200 different websites.
So, instead of searching for hours or spending too much, Trivago makes it easy for you to find the ideal hotel for the best price.
Just go to Trivago, type in where you want to go, and with two clicks select your check-in and check-out dates and search. It’s that simple.
Trivago searches hundreds of websites at the same time and shows you the most popular hotels. You can adjust the price so that it fits in with your budget, or select the number of stars, or filter by average guest ratings from over 100 million reviews.
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.
Hotel? Trivago
The landing page for the Trivago website (the Landing Page) displays the Trivago logo. During the first part of the Relevant Period, the logo was accompanied by the slogan: “Find your ideal hotel for the best price”. Later in the Relevant Period, this was changed to read: “Find your ideal hotel and compare prices from many websites”. The slogan was subsequently changed again, by replacing the word “many” with the word “different”.
Consumers visiting the Trivago website are prompted to enter a city or region in a search bar and select their desired dates and room type (eg, single, double, family or multiple rooms). Consumers are also able to search by hotel. When a consumer initiates a search in a given city or region, the Trivago website displays an initial set of search results for the city or region, stay dates and room type the consumer has selected (the Initial Search Results Page). For example, during the first part of the Relevant Period, the Initial Search Results Page appeared in the following format:
Each hotel listing on the Initial Search Results Page is displayed in substantially the same way, with the following features:
(a)To the left, there is a square image relating to the particular hotel (typically, this is a photograph of one of the hotel’s rooms or of the hotel’s façade). (Although the image appears rectangular in the above picture, it is a square shape in the pictures set out later in these reasons.)
(b)To the right of that image is the hotel’s name and beneath the name is information about the hotel, including its star rating, location and a user survey rating.
(c)Further to the right, there are prices for the hotel as offered by online booking sites, online travel agencies and (sometimes) the hotel itself (referred to collectively as Online Booking Sites in these reasons). (Consistently with the way in which the case was presented by both parties, it will be convenient to refer to these prices as “offers”.) Further aspects are as follows:
(a)In the far right column, one offer is displayed in green text, in a relatively large font (the Top Position Offer). The Top Position Offer is displayed together with the name of the Online Booking Site making that offer and a green “View Deal” click-out button.
(b)Juxtaposed above the Top Position Offer is another offer displayed in red. During part of the Relevant Period, this offer was displayed in red strike-through text (the Strike-Through Price) (as depicted above). Subsequently, this offer was displayed in red text without the strike-through (the Red Price).
(c)Three offers are displayed in the column that is second from the right. These appear in a smaller font compared with the Top Position Offer. These offers are referred to as the Second Position Offer, the Third Position Offer and the Fourth Position Offer.
(d)Underneath the Second, Third and Fourth Position Offers, a “More Deals” button is displayed in bolded black text (the More Deals button). If clicked, the More Deals button shows, by way of a ‘slide-out’ function (the More Deals slide-out), other offers from Online Booking Sites for the selected hotel. In the first part of the Relevant Period, the More Deals button indicated the number of additional offers presented in the slide-out (as depicted above). Subsequently, the More Deals button was changed to indicate the lowest offer presented in the More Deals slide-out (eg, “More Deals from AU$226”).
If a consumer clicks on an Online Booking Site’s offer on the Trivago website, the consumer is taken to the Online Booking Site’s website and may complete the booking by using the Online Booking Site’s website’s booking service.
A number of changes were made to the Trivago website during the Relevant Period. In addition to the changes already referred to, the changes included the introduction of a number of ‘hover-overs’. If a consumer’s mouse cursor hovered over a particular part of the Initial Search Results Page, text would be displayed that provided additional information. Further details of the changes to the Trivago website during the Relevant Period are provided later in these reasons.
The ACCC alleges that Trivago made four representations at various times during the Relevant Period:
(a)that the Trivago website would quickly and easily identify the cheapest rates available for a hotel room responding to a consumer’s search (the Cheapest Price Representation);
(b)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 (the Top Position Representation);
(c)that the Strike-Through Price was a comparison between prices offered for the same room category in the same hotel (the Strike-Through Representation); and
(d)that the Red Price was a comparison between prices offered for the same room category in the same hotel (the Red Price Representation).
The ACCC also alleges that Trivago engaged in conduct that led 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 (the additional conduct allegations).
Trivago admits the part of the ACCC’s case based on the Cheapest Price Representation. With respect to a portion of the Relevant Period, Trivago also admits the part of the ACCC’s case based on the Strike-Through Representation. However, the balance of the ACCC’s case is contested.
An important element of the ACCC’s case concerns the fact that Trivago’s contractual terms require Online Booking Sites to pay Trivago a fee, referred to as the Cost Per Click (CPC), if a consumer clicks on the Online Booking Site’s offer on the Trivago website. The CPC is payable whether or not the consumer makes a booking on the Online Booking Site’s website and is Trivago’s principal source of revenue. The CPC is not a fixed amount; rather, Trivago invites Online Booking Sites to submit “CPC bids” to Trivago. In order for the Online Booking Site’s offer to be displayed on the Trivago website, the CPC bid payable by the Online Booking Site must meet a minimum amount, which is determined by Trivago.
The ACCC alleges that Trivago selected the Top Position Offer primarily by reference to the value of the CPC Trivago would receive from the Online Booking Site in respect of the offer. Trivago disputes this and contends that the offer price was a more important factor than CPC in determining which offer was selected as the Top Position Offer. Both the ACCC and Trivago called computer science experts to express opinions on the algorithm used by Trivago to select the Top Position Offer (the Top Position algorithm). The experts agreed that in approximately 66% of listings, higher priced hotel offers were selected as the Top Position Offer over alternative lower priced offers.
In relation to the Strike-Through Representation and the Red Price Representation, the ACCC alleges that, contrary to those representations, the Strike-Through Price (or the Red Price) often related to a more expensive room category than the Top Position Offer. There is no dispute that in some cases the Strike-Through Price did not relate to the same room category as the Top Position Offer.
For the reasons that follow, I have concluded, in summary, as follows:
(a)that Trivago made each of the Cheapest Price Representation, the Top Position Representation, the Strike-Through Representation and the Red Price Representation during the periods alleged by the ACCC;
(b)that in the making the Cheapest Price Representation, Trivago contravened ss 18 and 34 of the Australian Consumer Law;
(c)that in making the Top Position Representation, the Strike-Through Representation and the Red Price Representation, Trivago contravened ss 18 and 29 of the Australian Consumer Law;
(d)that Trivago engaged in the additional conduct described in [10] above in the period up to 2 July 2018; it is not established that Trivago engaged in that conduct during the balance of the Relevant Period; and
(e)that in engaging in the additional conduct described in [10] above in the period up to 2 July 2018, Trivago contravened ss 18 and 34 of the Australian Consumer Law.
THE ORIGINATING APPLICATION, THE CONCISE STATEMENT AND THE CONCISE RESPONSE
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).
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.
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.
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”.
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.
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.
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.
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.
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.
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.
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.
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”.
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”.
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:
12Contrary 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.
13Trivago 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.
…
15Beneath 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.
The Concise Statement also includes the following allegation:
19By 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.
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.
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.
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.
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.
DStrike 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.
THE HEARING
The hearing, which was a trial on liability only, occupied five days.
The ACCC called two witnesses:
(a)Professor Robert Slonim, a Professor in the School of Economics, Faculty of Arts and Social Sciences, University of Sydney; and
(b)Mr Victor Bajanov, who holds the position of Executive, Product Analytics at Quantium, which is a global data and analytics firm headquartered in Sydney.
There was an objection to the whole of Professor Slonim’s report. I ruled that certain parts of the report should not be received into evidence and that the balance of the report should be received, and said that I would provide my reasons later, in this judgment. My reasons for this ruling are set out later in these reasons.
Trivago called two witnesses:
(a)Professor David C Parkes, a Professor in the School of Engineering and Applied Sciences, Harvard University; and
(b)Mr Patrick Smith, a partner at RBB Economics.
Trivago did not call any of its officers or employees to give evidence.
There was an objection to the whole of Mr Smith’s report. I ruled that certain parts of the report were inadmissible and that the balance of the report should be received into evidence, again indicating that I would provide my reasons later, in this judgment. My reasons for this ruling are set out later in these reasons.
Mr Bajanov and Professor Parkes prepared a joint report. They gave evidence concurrently.
The parties prepared and tendered a statement of agreed facts.
The ACCC relied on a number of documents (including videos of television advertisements) contained in the Court Book. All but two of these documents were admitted without objection. However, in relation to two of the documents, the ACCC sought to rely on certain parts of the documents as admissions under s 81 of the Evidence Act 1995 (Cth), and Trivago objected. The two documents are: a letter from King & Wood Mallesons, the solicitors for Trivago, to the ACCC dated 28 September 2017 (the KWM September 2017 letter); and attachment A to Trivago’s response dated 22 February 2018 to a notice served by the ACCC under s 155 of the Competition and Consumer Act (Trivago’s Response to the ACCC). I indicated that I would rule on this issue in the course of my judgment. I deal with this issue later in these reasons.
FACTUAL FINDINGS
The following factual findings are based on the statement of agreed facts and the other documents admitted into evidence.
Trivago
Trivago is incorporated in the Netherlands and is a foreign corporation within the meaning of s 4 of the Competition and Consumer Act.
Trivago carries on business in Australia within the meaning of s 5 of the Competition and Consumer Act by conducting an online search and price comparison platform for travel accommodation, namely the Trivago website.
Trivago’s advertising and marketing
During the Relevant Period, Trivago used a number of advertising mediums to advertise its website to Australian consumers.
Trivago caused a number of television advertisements to be aired on Australian television networks:
(a)between 28 August 2016 and 29 May 2017, Trivago caused a television advertisement to be aired on television networks in Australia 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
(b)from 13 January 2017 to 29 May 2017, Trivago caused television advertisements to be aired on television networks in Australia containing the following statements:
Trivago makes it easy for you to find the ideal hotel for the best price …
You can be sure that you can find your ideal hotel at the best price …
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
(c)between 20 December 2016 and 2 July 2018, Trivago caused television advertisements to be aired, which included the following statement:
and that’s one more way Trivago helps you find your ideal hotel at the best price.
The television advertisement described in [3] above was aired on Australian television networks between 10 January 2016 and 26 September 2017: see the description in the Court Book index of the document at Court Book tab 14.
In the period 29 June 2017 to 1 April 2018, a television advertisement with the following text was aired on Australian television networks (see the description in the Court Book index of the document at Court Book tab 33):
Did you notice that there are so many different prices out there for the exact same room?
I know I’ve been asking this a lot lately, but this is what it really means. The same hotel room can have up to ten different prices across the internet. So even if you spend a lot of time looking around, chances are, it is still out there for a better price. So make one last check before you book, the Trivago check.
Trivago compares prices from more than 200 websites to make sure you find your ideal hotel for the best price.
Hotel? Trivago
In the period between 19 December 2017 and 1 April 2018, a television advertisement with the following text was aired on Australian television networks (see the description in the Court Book index of the document at Court Book tab 36):
There are plenty of booking websites. Your ideal hotel may only be listed on one, or on several, but for very different prices. Do you really want to check them all?
Instead, use Trivago to compare these offers and find your ideal hotel for the best price.
Hotel? Trivago
I note that the television advertisements identified in the preceding paragraphs did not constitute the entirety of Trivago’s television advertisement campaign. Indeed, the Court Book contains 24 video clips of television advertisements that were broadcast during various parts of the first and second relevant sub-periods.
Between 1 December 2016 and on or around 19 June 2017, Trivago caused the following statements to be made in a ‘snippet’ which appeared beneath Google search results displayed when Australian consumers conducted a search for “Trivago”:
Compare over 250 booking sites and find the ideal hotel at the best price!
Compare hotels, find the cheapest price and guarantee the best deal on accommodation …
The Trivago website
Trivago’s business involves aggregating accommodation offers made by different Online Booking Sites, and displaying some of these offers on the Trivago website. The Trivago website interacts with the Online Booking Sites’ databases and displays accommodation offers in response to consumers’ searches.
If a consumer clicks on an Online Booking Site’s offer on the Trivago website, the consumer is taken to the Online Booking Site’s website and may complete the booking by using the Online Booking Site’s website’s booking service. Trivago’s contractual terms require Online Booking Sites to pay Trivago a fee (the CPC) if a consumer clicks on the Online Booking Site’s offer on the Trivago website. The CPC is payable whether or not the consumer makes a booking on the Online Booking Site’s website and is Trivago’s principal source of revenue. In order for an Online Booking Site’s offer to be displayed on the Trivago website, the CPC bid payable by the Online Booking Site must meet a minimum amount, which is determined by Trivago.
Trivago does not charge fees to consumers to access its website. The CPC payable by the Online Booking Site to Trivago is the amount bid by the Online Booking Site directly to Trivago on Trivago’s marketplace. Consumers are not informed by Trivago of the fact that Online Booking Sites pay a cost per click to Trivago, nor of the amount of the CPC payable by any Online Booking Site.
Consumers visiting the Trivago website are prompted to enter a city or region in a search bar and select their desired dates and room type, as described in [5] above.
Each hotel listing on the Initial Search Results Page is displayed in substantially the same way, with the features described in [6] above.
For part of the Relevant Period, some hotel listings on the Initial Search Results Page also had the following features:
(a)until about 20 November 2018, if the Top Position Offer was at least 20% lower than the Strike-Through Price, the percentage difference was displayed in a red box above the Top Position Offer (Percentage Savings box); and
(b)until about 6 August 2018, if, among other factors, the Top Position Offer was at least 20% lower than the Strike-Through Price, the hotel had a rating of at least three stars and the hotel met Trivago’s internal rating index for quality, the words “Top Deal” were displayed in a red box above the Top Position Offer (Top Deal box).
Above the hotel listings on the Initial Search Results Page appears a “Sort by” filter which allows consumers to specify the sorting parameters for the hotel listings (the Sort By Filter). The current default Sort By Filter is “Our recommendations”. Other Sort By Filters include “Rating only”, “Price only” and “Distance only”.
Additional filtering tools are available to consumers who want to exclude offers on the Initial Search Results Page, including a price per night scrolling bar (where consumers can set the maximum cost per night), accommodation type (for example, hotel or house/apartment) and hotel location (for example, number of kilometres from city centre).
For part of the Relevant Period, the Sort By Filter also had the following further features:
(a)since about 6 October 2017, an information button in the form of an ‘i’ has appeared directly next to the words “Our recommendations” (the Our Recommendations information button). (See [26(b)] of the statement of agreed facts; cf [17] of the statement of agreed facts.) If a consumer’s mouse cursor hovers over the Our Recommendations information button, text containing information in relation to the ranking results (as detailed below) will appear; and
(b)since about 17 April 2019, directly next to the Our Recommendations information button, the words “How payments to us affect ranking” have appeared.
The first relevant sub-period (1 December 2016 to 29 April 2018)
In the period from about 1 December 2016 to 4 January 2018, the slogan beneath the logo on the Landing Page read: “Find your ideal hotel for the best price”. Further below, under the heading “Find cheap hotels on trivago”, appeared the statement:
With trivago you can easily find your 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.
(Emphasis in original.)
As at 4 January 2018, the top part of the Landing Page appeared as follows:
Prior to 12 April 2018, another slogan appeared on the Trivago website. This read: “Find your ideal hotel and compare prices from many websites”. From on or about 12 April 2018, the slogan was amended to state: “Find your ideal hotel and compare prices from different websites”.
The statement of agreed facts includes various screenshots of website version 1 (although it should be noted that there were changes to the website during the course of the first relevant sub-period, as detailed below). One of these screenshots has been set out at [5] above. The statement of agreed facts also includes the following screenshots of individual hotel listings from website version 1. (I note that some, but not all, of the screenshots have figure numbers and descriptions.)
____________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
In response to a consumer search, website version 1 generated an Initial Search Results Page containing a number of individual hotel listings, each of which displayed:
(a)the Top Position Offer in the column furthest to the right. The Top Position Offer was the most prominently displayed offer for the hotel. It was displayed together with the Online Booking Site’s name and a green “view deal” click-out button. In addition, some hotel listings on the Initial Search Results Page displayed a box underneath the Top Position Offer showing that the Top Position Offer had particular attributes including, for example, “Pay at the hotel” or “Free cancellation”;
(b)the Strike-Through Price in red, strike-through text above the Top Position Offer;
(c)the Second, Third and Fourth Position Offers in smaller size text (compared with the Top Position Offer and Strike-Through Price). These offers were displayed less prominently than the Top Position Offer and were contained in one column;
(d)the More Deals button, with bolded black text indicating (until about 5 December 2017) the number of further offers contained in the More Deals slide-out (e.g. “More deals: 22”);
(e)the Percentage Savings box (if the conditions referred to in [58(a)] above were met); and
(f)the Top Deal box (if the conditions referred to in [58(b)] above were met).
Between May 2017 and January 2018, the Trivago website displayed the Strike-Through Price as the Fourth Position Offer (in addition to it appearing directly above the Top Position Offer). In or around January 2018, the Strike-Through Price ceased to be shown as the Fourth Position Offer.
In addition, during the first relevant sub-period, the following changes were made to the Initial Search Results Page:
(a)on or about 5 December 2017, the More Deals button on Trivago’s desktop website ceased to include the text indicating the numbers of further offers contained within the More Deals slide-out; instead, the bolded black text was changed to read “More deals from AU$...” and displayed the price of the cheapest deal contained in the More Deals slide-out (e.g. “More deals from AU$226”);
(b)on or about 6 October 2017, the Trivago website began displaying the Our Recommendations information button with a hover-over. If a consumer’s mouse cursor hovered over the Our Recommendations information button, the hover-over would display text stating (see p 24 of the statement of agreed facts):
trivago gives you the opportunity to compare different offers for hotel rooms that are available through trivago’s website. In some cases, lower prices might be available from other sources. 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.
(c)from about 27 January 2018, the text displayed if a consumer’s mouse cursor hovered over the Our Recommendations information button stated:
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.
(d)on or about 29 March 2018, a hover-over was added in respect of the Strike-Through Price. If a consumer’s mouse cursor hovered over the Strike-Through Price, the following text was displayed:
The strike-through price corresponds to the cheapest offer we received from the most expensive booking site on trivago for this hotel and your stay dates.
(e)on or about 29 March 2018, a hover-over was added for the Percentage Savings box (which was displayed if the conditions in [58(a)] above were met). If a consumer’s mouse cursor hovered over the Percentage Savings box, the following text was displayed:
This figure represents the difference between the strike-though deal price and the featured deal price.
(f)on or about 29 March 2018, a hover-over was added for the Top Deal box (which was displayed if the conditions in [58(b)] above were met). If a consumer’s mouse cursor hovered over the Top Deal box, the following text was displayed:
This deal is at least 20% cheaper than the strike-through deal price and its trivago Rating Index is above 7.5.
The second relevant sub-period (29 April 2018 to 20 November 2018)
Since 12 April 2018 (i.e. just before the start of the second relevant sub-period), the words on the Landing Page have read: “Find your ideal hotel and compare prices from different websites”. During the second, third and fourth relevant sub-periods, the Landing Page therefore appeared as follows:
The statement of agreed facts includes a number of screenshots of website version 2.
In response to a consumer search, the Initial Search Results Page in website version 2 displayed the same features set out in [66]-[68] above.
However, during the second relevant sub-period, the following changes to the Initial Search Results Page occurred:
(a)in or around August 2018, the text displayed if a consumer’s mouse cursor hovered over the Strike-Through Price was amended to state:
This is the cheapest deal from the most expensive booking site with offers for this hotel on your stay dates.
(b)on or about 6 August 2018, the Top Deal box was removed from the Trivago website.
In addition, website version 2 had the following new features:
(a)from about 3 July 2018, information about Trivago’s algorithm and ranking of offers on the Initial Search Results Page was provided to consumers under the link “Learn how trivago works”; and
(b)in about October 2018, the text displayed if a consumer’s mouse cursor hovered over the Our Recommendations information button was amended to include a hyperlink to that “Learn how trivago works” page. Consumers who clicked on that link were taken to a new page on the Trivago website that stated:
How does trivago determine the ‘our recommendations’ sort?
The ‘our recommendations’ feature is based on a dynamic algorithm that shows you a range of attractive and relevant offers we think you’re going to love. In the ‘top position’ we display in green the offer which our algorithm recommends as a great offer. Our algorithm takes into account a number of relevant factors, such as your search criteria (for example your location and stay dates), the offer’s price, and its general attractiveness – for example the experience we think you’ll likely have on the displayed booking site. We also take into account the compensation booking sites provide us with when a user clicks on an offer.
To the left of the ‘top position’ offer and/or under the ‘more deals from’ tab, we display additional offers to allow you to compare other deals for the same hotel. You may find offers under the ‘more deals from’ slide-out section with a lower price than the ‘top position’ offer. While price is an important factor when selecting our ‘top position’ offer, we believe other factors, such as those mentioned above, make offers attractive and relevant to you, and contribute to high levels of satisfaction by our users.
Ultimately, our mission is to give you the information and tools to help you find your ideal hotel.
The third relevant sub-period (20 November 2018 to 13 February 2019)
The statement of agreed facts includes a number of screenshots of website version 3. These include the screenshot below.
In response to a consumer search, the Initial Search Results Page in website version 3 displayed:
(a)the Top Position Offer in the column furthest to the right. The Top Position Offer was the most prominently displayed offer on the Trivago website. It was displayed together with the Online Booking Site’s name and a green “view deal” click-out button. In addition, some hotel listings on the Initial Search Results Page displayed a box underneath the Top Position Offer showing that the Top Position Offer had particular attributes including, for example, “Pay at the hotel” or “Free breakfast”;
(b)(for some of the hotel listings only) a Red Price from identified Online Booking Sites in smaller text above the Top Position Offer with a hover-over. If a consumer’s mouse cursor hovered over the Red Price, the following text was displayed:
For your stay dates, this is the cheapest deal from the most expensive booking site with offers for this hotel. It may relate to a room type or amenities package that differs from other offers on our site.
(c)the Second, Third and Fourth Position Offers in smaller size text (compared with the Top Position Offer) to the left of the Top Position Offer. These offers were displayed less prominently than the Top Position Offer and were contained in one column;
(d)the More Deals button as described in [68(a)] above; and
(e)the Our Recommendations information button as set out in [68(c)] and [73(b)] above.
Website version 3 did not include the following features:
(a)the Strike-Through Price (save to the extent the Strike-Through Price continued to appear in the map portion of the Trivago website);
(b)the Percentage Savings box; and
(c)the Top Deal box.
On or about 14 January 2019, it came to Trivago’s attention that the words “best price” appeared in a subset of Google unpaid Trivago-related search results in Australia. To produce its unpaid search results, Google ‘crawls’ internet pages, including the metadata of those pages. Although Trivago updated the metadata of the Trivago website, Trivago inadvertently did not update the metadata of the pages for individual hotels on the Trivago website. As a result, Google.com.au unpaid search results for individual hotels (e.g., for a Trivago listing for the Hilton in Sydney) included a snippet that included the words “best price”. Trivago subsequently updated the metadata for these pages. This error did not affect Trivago’s paid advertisements or its other unpaid listings on Google.
The fourth relevant sub-period (13 February to 13 September 2019)
On or about 13 February 2019, it came to Trivago’s attention that strike-through prices continued to appear on the map portion of the Trivago website. When searching for hotels in a particular location, a user can select an option to view a map that includes relevant offers. The map was inadvertently not updated and, as a result, strike-through prices continued to be displayed when users hovered over price symbols on the map. Trivago removed these strike-through prices promptly after becoming aware of this issue. Therefore, during the fourth relevant sub-period, the Strike-Through Price no longer appeared in the map portion of the Trivago website.
The statement of agreed facts includes a number of screenshots of website version 4. These include the screenshot below.
In response to a consumer search, the Initial Search Results Page for website version 4 displayed the same features set out in [75] above.
In addition, since about 17 April 2019, website version 4 added the following words next to the Our Recommendations information button: “How payments to us affect ranking”. The hover-over accompanying the Our Recommendations information button continued to read as set out in [68(c)] and [73(b)] above.
The KWM September 2017 letter and Trivago’s Response to the ACCC
As noted above, the ACCC sought to rely on certain parts of the KWM September 2017 letter and Trivago’s Response to the ACCC as admissions under s 81 of the Evidence Act, and Trivago objected. The parts of each document that the ACCC sought to rely on in this way were identified in a document handed up by senior counsel for the ACCC. I indicated that I would rule on this issue in the course of my judgment. In the meantime, and subject to that ruling, the documents were admitted into evidence on a limited basis (pursuant to s 136 of the Evidence Act), namely that they were received as evidence of what Trivago said to the ACCC (as distinct from evidence of the truth of the contents of the documents).
Section 81 (excluding the Note and the Example) provides as follows:
81Hearsay and opinion rules: exception for admissions and related representations
(1) The hearsay rule and the opinion rule do not apply to evidence of an admission.
(2)The hearsay rule and the opinion rule do not apply to evidence of a previous representation:
(a)that was made in relation to an admission at the time the admission was made, or shortly before or after that time; and
(b)to which it is reasonably necessary to refer in order to understand the admission.
The word “admission” is defined in the Dictionary to the Evidence Act as follows:
admission means a previous representation that is:
(a)made by a person who is or becomes a party to a proceeding (including a defendant in a criminal proceeding); and
(b)adverse to the person’s interest in the outcome of the proceeding.
The expression “previous representation” is defined as meaning “a representation made otherwise than in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced”. The word “representation” is defined as including an express or implied representation (whether oral or in writing). Clause 6 of Pt 2 of the Dictionary deals with representations in documents. Clause 8 of Pt 2 deals with references to documents.
The ACCC contends that the parts of the documents it has identified fall within the definition of “admission” set out above. In response, Trivago contends that the parts of the documents identified by the ACCC are not adverse to Trivago’s interest in the outcome of the proceeding and are therefore not “admissions”. In the alternative, Trivago submits that, if any of the parts of the documents identified by the ACCC are admissions, then the whole of the document should be admitted on the same basis (that is, as evidence of the truth of the contents of the document) in order to provide context for the admissions.
I will deal first with the KWM September 2017 letter. In my view, the parts of this document identified by the ACCC are not adverse to Trivago’s interest in the outcome of the proceeding because: (a) they do not take matters beyond what is already covered by the evidence; or (b) they merely provide additional factual detail that does not assist the ACCC to make out its case (at least in relation to liability); or (c) they go to matters that are beyond the scope of the ACCC’s case as set out in the Concise Statement. An example of the second category is a statement at pp 4-5 of the letter about the average minimum CPC and the average maximum CPC on certain days in a particular city. These amounts merely provide additional detail about matters that are covered by the statement of agreed facts. They do not assist the ACCC to establish any of its claims. Accordingly, the KWM September 2017 letter will not be received as evidence of the truth of the contents of the document; it will, however, remain in evidence on the limited basis outlined above.
I turn now to Trivago’s Response to the ACCC. This document is headed “Attachment A – Response to Schedule 1 of ACCC Information Request dated 3 January 2018” and is dated 22 February 2018. In my view, subject to one exception, the parts of the document identified by the ACCC are not adverse to Trivago’s interest in the outcome of the proceeding because: (a) they do not take matters beyond what is already covered by the evidence; or (b) they merely provide additional factual detail that does not assist the ACCC to make out its case (at least in relation to liability); or (c) they go to matters that are beyond the scope of the ACCC’s case as set out in the Concise Statement. The exception concerns [5.1]-[5.12] of the document. The ACCC seeks to rely on parts of these paragraphs as admissions. I will set out these paragraphs in full, with the parts upon which the ACCC seeks to rely indicated in italics:
5. In the period from 1 December 2016 to the date of this Notice:
(a)state the total number of times that consumers visited the Australian Website and entered a region or location into Trivago’s search bar
5.1trivago does not record the number of times users visit its Australian Website and enter a region or location into the search bar. However, trivago records the number of times new search results are displayed on its Australian Website. New search results may be displayed as a result of: (i) a user entering a location, region or Hotel into the search bar; (ii) a user changing the search parameters (e.g. by using one of the available sort or filter functions on trivago’s Australian Website); or (iii) a search engine link redirecting to a search result page on trivago’s Website.
5.2In the period 1 December 2016 to 3 January 2018 new search results were displayed on trivago’s Australian Website 217,514,783 times. (Please note this number is different from the “sessions” numbers discussed below.)
(b)state the total number of consumers who, after entering a region or location into Trivago’s search bar, took the following actions:
5.3As noted above, trivago does not record the number of users visiting its Australian Website or the number of times a user enters a location or region in trivago’s search bar. However, trivago records the number of user “sessions”. A session starts when a user first interacts with the trivago Website and continues until the user has been inactive for one hour. For example, if a user visits trivago’s Australian Website and is then inactive for an hour before interacting with the site again, two user sessions will be logged by trivago’s system. Accordingly, the number of sessions is likely higher than the number of users, and less than the total number of times new search results were displayed on trivago’s Australian Website. However, as more precise data regarding unique user or search numbers is not available, trivago provides the number of sessions it has recorded as in its responses to question (i)-(xiii) below.
(i)changed the sorting order from the Default Sorting Option to a different Sorting Option
5.4In the period 1 December 2016 to 3 January 2018 there were 4,421,184 sessions on trivago’s Australian Website where the sorting order was changed from the Default Sorting Option to a different Sorting Option.
(ii) clicked on the More Deals Button for any Hotel listing
5.5trivago does not record the number of times the More Deals Button is clicked. However, trivago records the number of times the More Deal Slide-Out is visible for any Hotel listing on its Australian Website. The More Deals Slide-Out can be accessed by clicking the More Deals Button but also in other ways (for example, by clicking on the Hotel name and then on the ‘Deals’ tab).
5.6In the period 1 December 2016 to 3 January 2018 there were 4,726,241 sessions on trivago’s Australian Website where the More Deals Slide-Out was displayed.
(iii) clicked through on a deal located in a More Deals Slide-Out
5.7In the period 1 December 2016 to 3 January 2018 there were 1,400,205 sessions on trivago’s Australian Website where a user clicked on a deal displayed in the More Deals Slide-Out.
(iv) used any of the filtering tools on the left-hand side of the screen
5.8In the period 1 December 2016 to 3 January 2018 there were 4,232,643 sessions on trivago’s Australian Website where any of the filtering tools on the left-hand side of the webpage were used. This figure does not include interactions with the two search bars on the left hand side of the webpage (for “Distance from [address]” and “Search hotel name”).
(v) clicked on a Top Position Offer for any Hotel listing
5.9In the period 1 December 2016 to 3 January 2018 there were 20,039,530 sessions on trivago’s Australian Website where the Top Position offer for any Hotel listing was clicked.
(vii)clicked on a Comparison Rate used in a Strike-through Price Representation
5.10The Comparison Rate used in the Strike-through Price Representation is not clickable but the Comparison Rate displayed immediately to the left of the Top Position offer (see screenshot below) can be clicked. The Comparison Rate offer is also available in the More Deals Slide-Out.
5.11trivago does not record clicks on the Comparison Rate unless the user clicks on the Comparison Rate displayed immediately to the left of the Top Position Offer as shown in the screenshot below.
5.12In the period 1 December 2016 to 3 January 2018 there were 68,783 sessions on trivago’s Australian Website where the Comparison Rate displayed immediately to the left of the Top Position offer was clicked.
(Italics added.)
In my view, the italicised parts of [5.3], [5.6], [5.7], [5.9] and [5.12] support the ACCC’s contentions regarding the appearance of the website and thus the ACCC’s contentions that the alleged representations were made. In particular, the comparison between the number of sessions where the Top Position Offer was clicked (20,039,530) and the number of sessions where the More Deals slide-out was displayed (4,726,241) provides support for the ACCC’s contentions regarding the prominence given to the Top Position Offer. The italicised parts of the above paragraphs are therefore adverse to Trivago’s interest in the outcome of the proceeding. In order to provide proper context, it is necessary to have regard to the other parts of the paragraphs set out above. Accordingly, I will receive [5.1]-[5.12] of Trivago’s Response to the ACCC as evidence of the truth of the contents of those paragraphs. The balance of the document will not be received as evidence of the truth of the contents; it will, however, remain in evidence on the limited basis outlined above.
I note for completeness that [5.13]-[5.20] of Trivago’s Response to the ACCC deal with a distinct subject-matter, relating to the order in which different hotels are listed on the Initial Search Results Page. The ACCC sought to rely on all but one of the paragraphs in that section. In my view, those paragraphs go beyond the scope of the ACCC’s case as set out in the Concise Statement.
FINDINGS IN RELATION TO THE COMPUTER SCIENCE EXPERT EVIDENCE
In this section of these reasons, I deal with the computer science expert evidence led from Mr Bajanov (called by the ACCC) and Professor Parkes (called by Trivago). Each of the experts was qualified to give the evidence that they did. Notwithstanding some cross-examination seeking to suggest that each expert was not independent or impartial, I consider that each expert expressed their opinions independently and impartially. Both experts impressed me as being very knowledgeable about the matters about which they gave evidence. To the extent that, in some respects, I prefer the evidence of one expert over the other on particular points, this should not be taken to be a reflection on the calibre of the expert; it is, rather, more a function of the issues that arise for determination in the context of this proceeding.
Mr Bajanov prepared an initial report dated 15 May 2019 (the First Bajanov Report) addressing nine questions that had been set out in his letter of instructions. Professor Parkes then prepared a report dated 15 July 2019 (the First Parkes Report), which largely responded to the First Bajanov Report. Mr Bajanov prepared a reply report dated 5 August 2019 (the Second Bajanov Report). Although not contemplated by the procedural orders, Professor Parkes then prepared a further report, dated 22 August 2019 (the Second Parkes Report), that provided additional analyses by way of response to the Second Bajanov Report. The two experts conferred to prepare a joint report dated 9 September 2019 (the Joint Report). The Joint Report is structured around the nine questions addressed in the First Bajanov Report, with elaboration in some cases to pick up additional questions dealt with in the subsequent reports. In the column “Points of Agreement”, there are certain matters (appearing in blue text) in respect of which Mr Bajanov had not verified the calculations.
As noted earlier, Mr Bajanov and Professor Parkes gave evidence concurrently. The session was structured around the nine questions set out in the Joint Report, with each expert giving a brief opening statement in relation to each question, followed by questions from counsel. After the completion of that process, there was some limited cross-examination (and re-examination) of each expert.
The concurrent evidence of the two experts was conducted in closed court due to the commercial sensitivity of some aspects of the Top Position algorithm and other data provided by Trivago, and the difficulty of discussing the issues without referring expressly to those matters. However, a claim for confidentiality is made only in respect of limited parts of the expert reports (including the Joint Report). The parts that are claimed to be confidential are highlighted in yellow; there are only limited parts of each report that are so highlighted. In preparing these reasons, I have endeavoured to avoid referring expressly to the parts of the expert reports in respect of which confidentiality has been claimed, and also to avoid referring expressly to the parts of the oral evidence of the two experts that disclosed the same material. However, I will refer to other parts of their oral evidence; that is, the parts of their oral evidence where they dealt with matters in the expert reports in respect of which confidentiality has not been claimed. I have included some evidentiary references to the concurrent evidence to assist the parties’ consideration of these reasons.
I note at this point that it emerged during the oral evidence that Professor Parkes’s reports were prepared with substantial assistance from a firm named Keystone Strategy (T172-176). It would have been desirable for the role of Keystone Strategy to have been described in the reports. Nevertheless, I am satisfied that Professor Parkes checked the drafting and calculations undertaken by Keystone Strategy and that the reports reflect Professor Parkes’s own opinions.
It will be convenient to structure this part of these reasons around the nine questions set out in the Joint Report. Where I refer in this section of the reasons to “the experts”, I am referring to both Mr Bajanov and Professor Parkes. (I discuss the other expert evidence separately, in later sections of these reasons.) In some of their evidence, the experts referred to online booking sites, online travel agencies and hotels as “advertisers”; however, for the reasons indicated above, I will refer to these entities as “Online Booking Sites”.
Question 1: Making reference to the source code, pseudocode and written descriptions in the documents provided, provide a brief, high-level description of how the Top Position and Default Sorting algorithms operate
Although this question refers to both the Top Position algorithm and the Default Sorting algorithm, it is only the first of these that is directly relevant to this case. The Default Sorting algorithm is concerned with the order in which listings appear on the Trivago website. However, the ACCC’s case, as outlined in its Concise Statement, does not complain about the order in which Trivago lists hotels on the website. The Default Sorting algorithm can therefore be put to one side for present purposes.
There was general agreement between the experts in relation to this question. I summarise the position that emerges from their evidence as follows.
The Top Position algorithm calculates a “composite score” for each offer made by an Online Booking Site with respect to a hotel listing. (The word “offer” here refers to the offer price for the hotel room, rather than the CPC bid.) The offer that has the highest composite score becomes the Top Position Offer for that hotel listing.
The inputs to the composite score (as set out in the Joint Report) are:
(a)the offer price, the CPC and the priority modifier;
(b)hotel position, average historical price, historical click-through rate; and
(c)minimum price, maximum price, minimum priority CPC, maximum priority CPC, minimum gain and maximum gain.
It is necessary to explain a number of the expressions referred to in the preceding paragraph:
(a)As already indicated, the “offer price” refers to the offer price for the hotel room, rather than the CPC bid.
(b)The “CPC” is the CPC that the Online Booking Site agrees to pay Trivago in respect of the hotel listing (also referred to as the CPC bid).
(c)The “priority modifier” is a value that adjusts the CPC value, as discussed further below. The “priority CPC” is the CPC multiplied by the priority modifier.
(d)The expression “gain” is a quantity related to the estimated revenue to Trivago from showing an offer, calculated as the product of the predicted Click Through Rate (CTR) on the offer and the priority CPC (the modified CPC bid for the offer) (see the glossary in the First Parkes Report).
Apart from the introduction of the hover-over, another change Trivago made to the website during the first relevant sub-period was the change to the More Deals button. On or about 5 December 2017, the More Deals button ceased to show the number of further offers contained within the More Deals slide-out and instead displayed the price of the cheapest deal contained in the More Deals slide-out. In circumstances where this figure was less than the Top Position Offer, a consumer would be able to determine from the face of the listing that the Top Position Offer was not the cheapest offer for the hotel. On this basis, Trivago submits that it did not make the Top Position Representation after 5 December 2017. In my view, there are at least two difficulties with this submission. First, assuming that the figure in the More Deals button was lower than the Top Position Offer, the figure appearing in the More Deals button was in a much smaller font than the Top Position Offer. It was also in black, rather than green, and at the bottom of a column containing other figures. Having regard to the way in which the figures were presented (see, eg, the screenshots at [65] above), I consider that some, perhaps many, consumers would not have observed the figure in the More Deals button and appreciated that it was less than the Top Position Offer. Secondly, I consider that, of the consumers who did observe the figure in the More Deals button and did appreciate that it was less than the Top Position Offer, some, perhaps many, would have nonetheless understood the Top Position Offer as being either the cheapest offer or having some other characteristic which made it more attractive than any other offer for the hotel. That impression was invited by the colour and relative size and positioning of the offers.
Accordingly, I consider that, even after the introduction of the hover-over (in connection with the Our Recommendations information button) and the change to the More Deals button, 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. This conclusion draws additional support from the click-through figures set out in [88] above, which show that there were 4,726,241 sessions where the More Deals slide out was displayed, compared with 20,039,530 sessions where the Top Position Offer for any hotel listing was clicked.
In making the Top Position Representation during the first relevant sub-period, Trivago engaged in conduct that was misleading or deceptive or likely to mislead or deceive, and thus contravened s 18 of the Australian Consumer Law. Contrary to the Top Position Representation, in many cases the Top Position Offer was not the cheapest offer for the hotel, nor did it have some other characteristic that made it more attractive than any other offer for the hotel. As noted above, the Trivago website does not display offers unless the Online Booking Site’s CPC bid exceeds a minimum threshold set by Trivago. Accordingly, in at least some cases, the cheapest offer for the hotel was not displayed on the Trivago website.
Also, as noted above, the expert evidence establishes that higher priced offers were selected as the Top Position Offer over alternative lower priced offers in 66.8% of listings. Accordingly, in many cases, the Top Position Offer was not the cheapest offer for the hotel.
Further, it may be inferred that in at least some cases where the Top Position Offer was not the cheapest offer, it did not have some other characteristic or characteristics that made it more attractive than any other offer for the hotel. The Top Position algorithm does not use non-price attributes of the offers to determine the composite score (and thus the Top Position Offer). As noted above, a very significant factor in the selection of the Top Position Offer is the CPC, that is, the amount that Trivago will be paid by Online Booking Sites (rather than the quality of the hotel accommodation offer). Insofar as Professor Parkes analysed certain cases where the Top Position Offer was at least 1% more than the cheapest offer and drew an inference that the CPC was conveying information about the quality of the underlying offer, for the reasons set out at [144] I am not satisfied that such an inference should be drawn. Further, as noted at [145], Professor Parkes did not seek to value the non-price attributes, and did not consider offers that were excluded because they did not meet the minimum CPC. His analyses do not, therefore, provide a basis to compare the relative value of the Top Position Offer and the lowest price offer. Insofar as Mr Smith expressed the view, based on economic theory, that the CPC is likely to act as a proxy for factors that are related to the quality and attractiveness of the offer, for the reasons set out at [177] above, I give that opinion very little weight. I note for completeness Trivago’s submission that, because the priority modifier was correlated with the landing page score, in this way the quality of the Online Booking Site’s website was taken into account. However, for reasons given above, the evidence does not establish how the landing page score in fact operated in practice. I am not prepared to infer that it operated as a quality measure in this way in the absence of evidence from a person with personal knowledge of this matter. Further and in any event, this point at best relates to the quality of the website rather than to the quality of the hotel accommodation offer. As I see it, the second limb of the Top Position Representation is concerned with the hotel accommodation offer rather than with the quality of the Online Booking Site’s website.
For the same reasons, in making the Top Position Representation during the first relevant sub-period, Trivago, in connection with the supply or possible supply of accommodation services, made misleading representations with respect to the price of those services (and thus contravened s 29(1)(i) of the Australian Consumer Law).
Additional conduct allegations
The ACCC alleges that, by making the Cheapest Price Representation, and by making Top Position Offers together with the Top Position Representation and the Strike-Through Representation, during the first relevant sub-period, Trivago led 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.
I have concluded, above, that Trivago made the Cheapest Price Representation, the Strike-Through Representation and the Top Position Representation during the first relevant sub-period. Considering this conduct as a whole, I am satisfied that Trivago did lead 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. For example, in the television advertisement set out at [3] above, the presenter referred to the fact that there are so many different prices out there (i.e. online) “for the exact same room”. She said that Trivago “does the work for you and instantly compares the prices of over 600,000 hotels from over 200 different websites”. It was said that, instead of “searching for hours”, Trivago “makes it easy for you” to find the ideal hotel for the best price. The presenter said that you just go to Trivago, type in where you want to go, and “with two clicks” select your check-in and check-out dates and search; “It’s that simple”. It was said that Trivago shows you all the different prices “for the exact same room”. The overall impression was that Trivago was impartial, objective and transparent. Although not as lengthy and detailed, the other television advertisements were to similar effect. The Strike-Through Representation and the Top Position Representation were consistent with the messages conveyed in the television advertisements. While changes were made to the Trivago website during the course of the first relevant sub-period (see [68] above), I do not consider these sufficient to dispel the impression created by the television advertisements.
I am satisfied that, by engaging in the conduct described in the preceding paragraph during the first relevant sub-period, Trivago engaged in conduct that was misleading and deceptive or likely to mislead or deceive (and thus contravened s 18 of the Australian Consumer Law) and conduct that was liable to mislead the public as to the nature, characteristics and suitability for purpose of the accommodation search service provided by the Trivago website (and thus contravened s 34 of the Australian Consumer Law). Contrary to the impression created by the relevant conduct, the Trivago website did not provide an impartial, objective and transparent price comparison service. In fact, the selection of the Top Position Offer was heavily influenced by the CPC, that is, the amount Trivago would be paid if a consumer clicked on the offer. The fact that Trivago was being paid by the Online Booking Sites was not made clear. Many consumers would not have appreciated that Trivago was being paid by the Online Booking Sites, let alone that the amount it was being paid was a very significant factor in the selection of the Top Position Offer. Further, for the reasons given at [203]-[204] above, the Trivago website did not quickly and easily identify the cheapest rates available for a hotel room responding to a consumer’s search. Importantly, in at least some cases, the cheapest offer for a hotel room was filtered out and therefore did not appear on the Trivago website.
The second relevant sub-period
In respect of the second relevant sub-period (29 April 2018 to 20 November 2018), the ACCC alleges the following representations and conduct:
(a)the Strike-Through Representation;
(b)the Top Position Representation; and
(c)the additional conduct allegations.
Strike-Through Representation
For ease of reference, I set out again the terms of the Strike-Through Representation. It is alleged that Trivago represented that the Strike-Through Price was a comparison between the prices offered for the same room category in the same hotel.
The format and appearance of the Strike-Through Price was essentially the same during the second relevant sub-period as during the first relevant sub-period. Accordingly, at least until August 2018, the reasoning in [207]-[211] above is equally applicable.
In August 2018, the text displayed if a consumer’s mouse cursor hovered over the Strike-Through Price was amended to state:
This is the cheapest deal from the most expensive booking site with offers for this hotel on your stay dates.
Again, there is a question whether any statement contained in the hover-over would be sufficient to dispel the impression that the Strike-Through Price and the Top Position Offer were comparable offers (apart from price). In any event, the reasoning set out in [209] is equally applicable to the amended wording of the hover-over. That is, the wording of this hover-over is confusing, and does not dispel the impression that the Strike-Through Price and the Top Position Offer were comparable offers (apart from price). In light of these matters, even after the change in the wording of the hover-over, I consider that Trivago represented that the Strike-Through Price was a comparison between prices offered for the same room category in the same hotel.
In making the Strike-Through Representation during the second relevant sub-period, Trivago engaged in conduct that was misleading or deceptive or likely to mislead or deceive, and thus contravened s 18 of the Australian Consumer Law. Trivago has admitted (see [34] above) that the Strike-Through Price did not always relate to the same room category as the Top Position Offer. Trivago has admitted that its conduct in this regard contravened s 18.
For the same reasons, in making the Strike-Through Representation during the second relevant sub-period, Trivago, in connection with the supply or possible supply of accommodation services, made misleading representations with respect to the price of those services (and thus contravened s 29(1)(i) of the Australian Consumer Law). I note that Trivago has admitted that its conduct in this regard contravened s 29(1)(i).
Top Position Representation
As noted above, the terms of the Top Position Representation are as follows. It is alleged that 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.
The way in which listings appeared on the Trivago website during the second relevant sub-period was similar to the first relevant sub-period: see [71]-[72] above. One difference was the change to the wording on the Landing Page. Since 12 April 2018 (i.e. just before the start of the second relevant sub-period), the words on the Landing Page have read: “Find your ideal hotel and compare prices from different websites”. In addition, from 3 July 2018, a link called “Learn how trivago works” was introduced. This provided information about Trivago’s algorithm and ranking of offers. In about October 2018, a link to the “Learn how trivago works” page appeared in the hover-over for the Our Recommendations information button, as described in [73(b)] above.
As noted above, in determining whether the Top Position Representation was conveyed by Trivago, by the Trivago website, it is necessary to consider the online context as well as formatting (including fonts and colours) used by Trivago on the website. The various matters identified in [213] were equally true during the second relevant sub-period. For the same reasons, 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).
The discussion of the hover-overs in [214]-[216] above is equally applicable in respect of the second relevant sub-period. The discussion of the More Deals button in [217] above is also equally applicable in respect of the second relevant sub-period.
Although the wording of the Landing Page was different during the second relevant sub-period, I do not consider this to affect whether or not the Top Position Representation was conveyed. The new wording, which refers to comparing prices from different websites, is neutral as to whether or not the representation was made.
In light of the above, I consider that, at least until 3 July 2018, 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.
The link that was introduced on about 3 July 2018 provided information about Trivago’s algorithm and ranking of offers on the Initial Search Results Page. There is a question whether a consumer would be likely to click on the link. I note, in this regard, that it is not clear from the statement of agreed facts where the link appeared on the Trivago website. In light of these matters, even after the introduction of this link, the impression created by the presentation of the Top Position Offer was the same as discussed above.
In relation to the link that was introduced in about October 2018, there is a question whether a consumer would be likely to click on the link, which was itself contained in a hover-over. In any event, the explanation provided in the linked page, which was entitled “How does trivago determine the ‘our recommendations’ sort” (see [73(b)] above), does not explain in clear terms the significance of the CPC in the selection of the Top Position Offer, but rather downplays its role by referring to it last after a number of other factors. The second paragraph of the page states that the consumer may find offers in the More Deals slide-out with a lower price than the Top Position Offer. However, it does not state that Trivago filters out offers that do not meet its minimum CPC threshold and that these offers, which may be cheaper, do not appear at all. The statement that, while price is an important factor when selecting the Top Position Offer, “we believe other factors, such as those mentioned above, make offers attractive and relevant to you, and contribute to high levels of satisfaction by our users” tends to suggest that, if the Top Position Offer is not the cheapest offer, this is because the offer has non-price characteristics that make it more attractive than the cheapest offer. This is consistent with, and may even support, the proposition that Trivago made the Top Position Representation.
Accordingly, I consider that, even after the introduction of the links on 3 July 2018 and in October 2018, 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.
In making the Top Position Representation during the second relevant sub-period, Trivago engaged in conduct that was misleading and deceptive or likely to mislead or deceive, and thus contravened s 18 of the Australian Consumer Law. The reasoning in [219]-[221] above applies equally here.
For the same reasons, in making the Top Position Representation during the second relevant sub-period, Trivago, in connection with the supply or possible supply of accommodation services, made misleading representations with respect to the price of those services, and thus contravened s 29(1)(i) of the Australian Consumer Law.
Additional conduct allegations
The ACCC alleges that, by making Top Position Offers on the Trivago website, making the Top Position Representation, making the Strike-Through Representation, and advertising the Trivago website as set out in [27] above, Trivago led 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.
I have concluded, above, that Trivago made the Strike-Through Representation and the Top Position Representation during the second relevant sub-period. Further, Trivago’s television advertisements continued until 2 July 2018. In addition to the television advertisement referred to in [47(c)] above (which aired until 2 July 2018), the Court Book at tab 37 includes a television advertisement that was aired between 26 September 2017 and 2 July 2018. Although not in precisely the same terms, this advertisement reiterates themes from the earlier television advertisements. Considering this conduct as a whole, I am satisfied that, at least until 2 July 2018, Trivago led 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.
In relation to the period after 2 July 2018, there is no evidence that Trivago conducted television advertising. Insofar as the ACCC relies on other forms of advertising, I note the following matters in relation to the period after 2 July 2018:
(a)In the Concise Statement at [20(b)], the ACCC relies on the advertising alleged in [6] and [8A] of the Concise Statement. In [6], the ACCC refers to a snippet that appeared in Google search results between 1 December 2016 and a date that is not known to the ACCC but was not before 14 January 2019. It is alleged that the snippet stated: “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 …”.
(b)In [8A] of the Concise Statement, the ACCC states:
Since on or around 15 April 2018, the Trivago website has stated: “Find your ideal hotel and compare prices from different websites”. Trivago has also caused the following statements to be made in the snippet which appeared beneath search results displayed when Australian consumers conducted an online search for “trivago”; “Compare 200+ booking sites globally, find the ideal hotel at great price! Find the perfect hotel. Free and Easy to Use. Fast and Simple. 1M+ Hotels Worldwide. High-quality hotel photos. Compare & Save. No Ads or Pop-ups” and “Compare 200+ booking sites globally, find the ideal hotel at great price! Many prices in one site. Save Time & Money. Enjoy Your Stay. Impartial Comparison. Compare Booking Sites. 1M+ Hotels Worldwide. Act Fast for Great Deals.”
(c)Insofar as the ACCC relies on snippets, the statement of agreed facts contains an agreed fact relating to a snippet (at [12]), but it concerns a period before 2 July 2018. Trivago has made admissions regarding the snippet (as set out in [34] above), but these also relate to a period before 2 July 2018. Trivago has admitted that on or about 14 January 2019, it came to its attention that the words “best price” appeared in a subset of Google unpaid Trivago-related search results in Australia (the admission was set out in a letter from KWM dated 16 April 2019, which is CB tab 60). However, that letter only goes so far as to say that the snippet contained the words “best price”. It does not set out the rest of the wording of the snippet. Accordingly, there does not appear to be evidence to support the ACCC’s allegations concerning snippets. I note that the paragraph of the ACCC’s written closing submissions dealing with the additional conduct allegations ([52]) does not include any evidentiary references.
(d)Insofar as the ACCC relies on statements on the Trivago website itself, it is true that, during the second relevant sub-period, the Trivago website stated: “Find your ideal hotel and compare prices from different websites”.
In respect of the period after 2 July 2018, I am not satisfied that, by making Top Position Offers on the Trivago website, making the Top Position Representation and the Strike-Through Representation, and stating “Find your ideal hotel and compare prices from different websites” on the Trivago website, Trivago led 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. The Top Position Representation and the Strike-Through Representation do not convey all aspects of this allegation. I do not consider that the allegation is to be inferred from the collection of all the matters relied on by the ACCC and established by the evidence. The position is different from the period before 2 July 2018 (discussed above), when Trivago conducted television advertising that conveyed these messages. Accordingly, in respect of the period after 2 July 2018, I am not satisfied that Trivago engaged in the alleged conduct.
I am satisfied that, by engaging in the conduct described in [244] above up to 2 July 2018 in the second relevant sub-period, Trivago engaged in conduct that was misleading or deceptive or likely to mislead or deceive (and thus contravened s 18 of the Australian Consumer Law) and conduct that was liable to mislead the public as to the nature, characteristics and suitability for purpose of the accommodation search service provided by the Trivago website (and thus contravened s 34 of the Australian Consumer Law). The reasoning in [225] above is equally applicable to this conduct.
The third relevant sub-period
In respect of the third relevant sub-period (20 November 2018 to 13 February 2019), the ACCC alleges the following representations and conduct:
(a)the Strike-Through Representation (in respect of the map portion of the website);
(b)the Red Price Representation;
(c)the Top Position Representation; and
(d)the additional conduct allegations.
Strike-Through Representation
The terms of the Strike-Through Representation, as noted above, are as follows. It is alleged that Trivago represented that the Strike-Through Price was a comparison between the prices offered for the same room category in the same hotel.
The statement of agreed facts establishes that the Strike-Through Price continued to appear in the map portion of the Trivago website during the third relevant sub-period (see [76(a)] above, which is based on the statement of agreed facts). The statement of agreed facts does not, however, include a screenshot of the map portion of the website. An indication of how the map portion of the Trivago website is accessed is indicated in the top left of the screenshot in [79] above (the box that includes the words “View Map”).
Although a screenshot is not available, I infer that the Strike-Through Price appeared immediately above or, at least, close to the Top Position Offer. The implicit representation conveyed by this positioning was that the two offers were comparable apart from price; in other words, that the offers were, apart from price, ‘like for like’. In light of this, I consider that Trivago represented that the Strike-Through Price was a comparison between prices offered for the same room category in the same hotel.
In making the Strike-Through Representation in the map portion of the Trivago website during the third relevant sub-period, Trivago engaged in conduct that was misleading or deceptive or likely to mislead or deceive, and thus contravened s 18 of the Australian Consumer Law. Trivago has admitted (see [34] above) that “the room rate [i.e. the Strike-Through Price] did not always relate to the same room category as the Top Position Offer”. While that admission was made in the context of the period up to 20 November 2018 (the date when Trivago ceased using the Strike-Through Price on the Initial Search Results Page), it appears that the proposition also applies to the Strike-Through Price in the map portion during the third relevant sub-period. This may be inferred from the Red Price hover-over, which included the statement that the Red Price “may relate to a room type or amenities package that differs from other offers on our site” (see [75(b)] above).
For the same reasons, in making the Strike-Through Representation in the map portion during the third relevant sub-period, Trivago, in connection with the supply or possible supply of accommodation services, made misleading representations with respect to the price of those services, and thus contravened s 29(1)(i) of the Australian Consumer Law.
Red Price Representation
The terms of this representation are as follows. The ACCC alleges that Trivago represented that the Red Price was a comparison between prices offered for the same room category in the same hotel.
The way in which the Red Price was depicted during the third relevant sub-period can be seen from the screenshot set out in [74] above. The Red Price appeared in red text in the same column as the Top Position Offer. No other offers were set out in that column of the listing for the hotel. Although the Red Price was a smaller size than the Top Position Offer, the presentation of both offers in the same column of the listing conveyed that the two offers were comparable offers apart from price; in other words, that the offers were, apart from price, ‘like for like’. This is the natural inference from the way the two offers were presented. It is also supported by Professor Slonim’s evidence, albeit generally expressed in terms of the Strike-Through Price.
Throughout the third relevant sub-period, if a consumer’s mouse cursor hovered over the Red Price, the following text was displayed:
For your stay dates, this is the cheapest deal from the most expensive booking site with offers for this hotel. It may relate to a room type or amenities package that differs from other offers on our site.
Again, there is a question whether any statement contained in the hover-over would be sufficient to dispel the impression that the Red Price and the Top Position Offer were comparable offers (apart from price). Further, in my view the wording of the hover-over is confusing, and does not dispel the impression that would otherwise be given that the Red Price and the Top Position Offer were comparable offers (apart from price).
In light of the above, and notwithstanding the hover-over, I consider that Trivago represented that the Red Price was a comparison between prices offered for the same room category in the same hotel.
In making the Red Price Representation during the third relevant sub-period, Trivago engaged in conduct that was misleading and deceptive or likely to mislead or deceive, and thus contravened s 18 of the Australian Consumer Law. It can be inferred from the second sentence of the hover-over that the Red Price did not always relate to the same room category as the Top Position Offer. There is no evidence from any officer or employee of Trivago to the contrary.
For the same reasons, in making the Red Price Representation during the third relevant sub-period, Trivago, in connection with the supply or possible supply of accommodation services, made misleading representations with respect to the price of those services, and thus contravened s 29(1)(i) of the Australian Consumer Law.
Top Position Representation
The terms of the Top Position Representation have been set out at [212] above.
Save for the change from the Strike-Through Price to the Red Price, the appearance of the Trivago website was substantially the same during the third relevant sub-period as it had been during the last part of the second relevant sub-period (that is, from about October 2018). Accordingly, the reasoning set out in [240]-[243] above, as it relates to the period from about October 2018, is equally applicable. I therefore reach the same conclusions as set out in that section with respect to the third relevant sub-period.
Additional conduct allegations
The ACCC’s allegations regarding additional conduct are the same for the third relevant sub-period as for the second relevant sub-period. The reasoning set out at [246]-[247] above in respect of the period after 2 July 2018 is equally applicable in respect of the third relevant sub-period. Accordingly, in respect of the third relevant sub-period, I am not satisfied that Trivago engaged in the alleged conduct.
The fourth relevant sub-period
In respect of the fourth relevant sub-period (13 February 2019 to 13 September 2019), the ACCC alleges the following representations and conduct:
(a)the Red Price Representation;
(b)the Top Position Representation; and
(c)the additional conduct allegations.
Red Price Representation
The terms of the Red Price Representation have been set out at [255] above.
The way in which the Red Price was depicted during the fourth relevant sub-period was essentially the same as during the third relevant sub-period. Accordingly, the description in [256] is equally applicable to the fourth relevant sub-period.
The description of the hover-over in [257] above is also applicable to the fourth relevant sub-period. The reasoning in [258] above, in relation to the hover-over, also applies to the fourth relevant sub-period.
The main difference between the third and fourth relevant sub-periods was the removal of the Strike-Through Price from the map portion of the website. This does not affect the reasoning in relation to the Red Price Representation.
On about 17 April 2019, during the course of the fourth relevant sub-period, the words “How payments to us affect ranking” were added next to the Our Recommendations information button. I do not consider the addition of these words to affect the analysis regarding the Red Price Representation.
In light of the above, I consider that Trivago represented that the Red Price was a comparison between prices offered for the same room category in the same hotel.
In making the Red Price Representation during the fourth relevant sub-period, Trivago engaged in conduct that was misleading or deceptive or likely to mislead or deceive, and thus contravened s 18 of the Australian Consumer Law. Again, it can be inferred from the second sentence of the hover-over in relation to the Red Price (see [257] above) that the Red Price did not always relate to the same room category as the Top Position Offer. Again, there is no evidence from any officer or employee of Trivago to the contrary.
For the same reasons, in making the Red Price Representation during the fourth relevant sub-period, Trivago, in connection with the supply or possible supply of accommodation services, made misleading representations with respect to the price of those services, and thus contravened s 29(1)(i) of the Australian Consumer Law.
Top Position Representation
The terms of the Top Position Representation have been set out at [212] above.
Save for the introduction of the words “How payments to us affect ranking” next to the Our Recommendations information button, the appearance of the Trivago website was substantially the same during the fourth relevant sub-period as it had been during the third relevant sub-period.
While the words added next to the Our Recommendations information button may draw a consumer’s attention to the button and therefore the hover-over associated with that button, there are deficiencies with the wording of the hover-over and the link included in that hover-over (see [239]-[240] above). Accordingly, notwithstanding the addition of those words, the reasoning in relation to the third relevant sub-period (see [263] above), which in turn adopts the reasoning in relation to the period from October 2018 in the second relevant sub-period, is equally applicable. I therefore reach the same conclusions in relation to the fourth relevant sub-period.
Additional conduct allegations
The ACCC’s allegations regarding additional conduct in relation to the fourth relevant sub-period are similar to the allegations relating to the second and third relevant sub-periods (see [28] above). The reasoning set out at [246]-[247] above in respect of the period after 2 July 2018 in the second relevant sub-period is equally applicable in respect of the fourth relevant sub-period. Accordingly, in respect of the fourth relevant sub-period, I am not satisfied that Trivago engaged in the conduct alleged.
CONCLUSION
For these reasons, I have reached the conclusions summarised in [15] above. I will list the matter for case management on a date to be fixed. There will need to be a hearing in relation to relief, including pecuniary penalties. I will hear from the parties at the case management hearing as to whether declarations should be made at this stage or after the further hearing.
I certify that the preceding two hundred and seventy-eight (278) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky. Associate:
Dated: 20 January 2020
Key Legal Topics
Areas of Law
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Consumer Law
Legal Concepts
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Misleading or Deceptive Conduct
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Contract Formation
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Consumer Law
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Unconscionable Conduct
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