The Munich Regional Court recently addressed the promotion of error fares by an online portal, HolidayPirates, for cheap travel deals. The promotions, which had encouraged customers to book error fares for flights published accidentally by airlines, were deemed unlawful due to a deliberate obstruction of competition in contravention of the Act Against Unfair Competition.
The German-based online portal HolidayPirates is one of the largest travel search providers for cheap flights, hotels and travel packages in Germany.
Besides low-cost travel offers, HolidayPirates also published 'error fares' for air tickets, which are offers that are priced significantly lower than normal and are mistakenly published on an airline's website.
Between 1 and 2 September 2017, an error fare was published by the largest German airline, Lufthansa, for a business-class flight to San Francisco for €687. The standard price was meant to be €3,846.
HolidayPirates had drawn its users' attention to this error fare with a price alert. Within a few hours, the offer had been taken up by approximately 600 people. These bookings were made even though the advertisement had expressly indicated that:
- the offer was clearly a mistake of the airline; and
- there was a high risk of the contract of carriage being cancelled.
Lufthansa considered the active promotion of error fares as an infringement of the Act Against Unfair Competition and initiated preliminary proceedings before the Munich Regional Court. The airline argued that HolidayPirates' anti-competitive conduct constituted a deliberate obstruction to competitors due to numerous complications and expected damages of at least €450,000 resulting from cancelled bookings.
Lufthansa provided a detailed explanation of these consequences in light of a similar scenario in 2012 that had resulted in substantial legal costs and enforcement problems for the airline in Germany and abroad. Further, Lufthansa feared that the cancellations and necessary legal proceedings would have a negative impact on its public perception.
On 11 December 2017 the Munich Regional Court decided in favour of Lufthansa (37 O 14236/17). The court considered the price alerts which had encouraged a large number of users to book error fares to be a deliberate obstruction to competitors.
Although the online portal itself did not sell tickets, but rather informed users about flight and travel deals, the court considered the parties to be competitors within the meaning of the Act Against Unfair Competition. The court found a link between the online portal's advantages with regard to advertising these error fares and the resulting disadvantages to Lufthansa.
The court highlighted that the online portal is a market leader in its sector and had reached millions of users and informed them about the error fares. Far from the occasional booking, there had been several hundred within a few hours. The effects of these actions had been serious (ie, considerable legal costs for Lufthansa and damage to its public image). Therefore, the price alert was deemed an anti-competitive practice, as it intentionally took advantage of an obvious mistake of the competitor and caused significant competitive disadvantages to Lufthansa which must not be tolerated.
At first glance, the court's decision may seem surprising given that the online portal had only advertised tariffs that were published on Lufthansa's website. However, considering the high number of consumers reached by online portals such as HolidayPirates, it is appropriate that price alerts for error fares qualify as an act of unfair competition. This was especially true in this case as the online portal had been aware of the airline's rights of cancellation and the fact that this could result in considerable legal costs and additional disadvantages to the airline.
For further information on this topic please contact Manuela Weber or Dinor Kadrijaj at Arnecke Sibeth Dabelstein by telephone (+49 69 97 98 85 0) or email ([email protected] or [email protected]). The Arnecke Sibeth Dabelstein website can be accessed at www.arneckesibeth.com.
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