The world's largest hotel group, Intercontinental Hotels Group (IHG), this morning stands accused of breaking competition law after allegedly fixing prices with two large online travel agents, reports The Telegraph.
Intercontinental, which operates the Holiday Inn and Crowne Plaza brands, is thought to have entered into deals with online booking agents Booking.com and Expedia to fix the discounts they can offer on their rooms.
Under UK competition law, price fixing is prohibited.
The Office of Fair Trading (OFT), which is responsible for investigating and prosecuting potential breaches of competition law, was first alerted to the possible price fixing in 2010. A rival discount website, Skoosh.com complained to the OFT over the behaviour of the three companies.
The Telegraph disclosed leaked documents it had obtained which showed that hotels had ordered travel agents not to offer discounts on their rooms.
IHG strenuously denies the allegations.
"IHG considers its arrangements with the online booking agents to be compliant with competition laws and consistent with the long-standing approach of the global hotel industry," they said in a statement.
"IHG is cooperating fully with the OFT's investigation, which commenced in 2010," they added.
The OFT fears that price fixing among established online travel agents is deterring newcomers from entering a market which is worth over £5bn in the UK each year. New entrants frequently share the profits they make with their customers to allow them to offer more substantial discounts than their larger, more established rivals.
Clive Maxwell is the chief executive of the OFT. He was keen to stress that the findings of the OFT investigation is provisional.
"We want people to benefit fully from being able to shop around online and get a better deal from discounters that are prepared to share their commission with customers," he said.
Other smaller retailers have confirmed that they have long suspected prices to have been fixed between the bigger brands and the hotels themselves; however, industry analysts are more sceptical, with one describing the OFT investigation as a 'nuisance'.