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PLEASE CREATE CASE ANALYSIS AND SUMMARY FOR THE BELOW? FEDERAL COURT OF AUSTRALIA Australian Competition and Consumer Commission v Trivago N.V. [2020] FCA 16 File

PLEASE CREATE CASE ANALYSIS AND SUMMARY FOR THE BELOW?

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Trivago N.V. [2020] FCA 16

File number: Judge:

Date of judgment: Catchwords:

VID 1034 of 2018

MOSHINSKY J

20 January 2020

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

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, 140Federal Court Rules 2011, r 5.04

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

Legislation:

Cases cited:

Date of hearing: Registry:

Division:

National Practice Area: Sub-area:

Category:

Number of paragraphs: Counsel for the Applicant: Solicitor for the Applicant: Counsel for the Respondent:

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 588Domain 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

9, 10, 11, 12 and 13 September 2019 Victoria

General Division

Commercial and Corporations Regulator and Consumer Protection Catchwords

278

Mr N O'Bryan AM SC with Mr Z de Kievit Corrs Chambers Westgarth

Mr N Young QC with Mr N De Young

Solicitor for the Respondent: King & Wood Mallesons

BETWEEN: AND:

JUDGE:

DATE OF ORDER:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant

TRIVAGO N.V.

Respondent

MOSHINSKY J

20 JANUARY 2020

ORDERS

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 theFederal Court Rules 2011.

VID 1034 of 2018

MOSHINSKY J:

INTRODUCTION

[1]

[16] [35] [43] [44] [46] [53] [62]

[278]

REASONS FOR JUDGMENT

THE ORIGINATING APPLICATION, THE CONCISE STATEMENT AND THE CONCISE RESPONSE

THE HEARING FACTUAL FINDINGS

Trivago

Trivago's advertising and marketing

The Trivago website

The first relevant sub-period (1 December 2016 to 29 April 2018) ...

CONCLUSION

INTRODUCTION

1The 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 "www.trivago.com.au" for Australian consumers (theTrivago website).

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  1. 2The applicant (theACCC) 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 Sch2 to theCompetition and Consumer Act 2010(Cth) (theAustralian 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 (theRelevant Period).
  2. 3Trivago 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:
  3. Have you ever looked for a hotel online?
  4. Did you notice that there are so many different prices out there for the exact same room?
  5. Trivago does the work for you and instantly compares the prices of over 600,000 hotels from over 200 different websites.
  6. 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.
  7. 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.
  8. 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.
  9. Remember, Trivago shows you all the different prices ...
  10. ... for the exact same room, and that's how you can be sure that you find your ideal hotel for the best price.

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Hotel? Trivago

  1. 4The landing page for the Trivago website (theLanding Page) displays the Trivago logo.
  2. 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".
  3. 5Consumers 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 (theInitial Search Results Page). For example, during the first part of the Relevant Period, the Initial Search Results Page appeared in the following format:
  4. 6Each 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 faade). (Although the image

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appears rectangular in the above picture, it is a square shape in the pictures set out later in these reasons.)

  1. (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.
  2. (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 asOnline Booking Sitesin 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:
  3. (a)In the far right column, one offer is displayed in green text, in a relatively large font (theTop 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.
  4. (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 (theStrike-Through Price) (as depicted above). Subsequently, this offer was displayed in red text without the strike-through (theRed Price).
  5. (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 theSecond Position Offer, theThird Position Offerand theFourth Position Offer.
  6. (d)Underneath the Second, Third and Fourth Position Offers, a "More Deals" button is displayed in bolded black text (theMore Deals button). If clicked, the More Deals button shows, by way of a 'slide-out' function (theMore 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 thenumberof additional offers presented in the slide-out (as depicted above). Subsequently, the More Deals button was changed to indicate thelowest offerpresented in the More Deals slide-out (eg, "More Deals from AU$226").

7If 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.

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  1. 8A 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.
  2. 9The ACCC alleges that Trivago made four representations at various times during the Relevant Period:
  3. (a)that the Trivago website would quickly and easily identify the cheapest rates available for a hotel room responding to a consumer's search (theCheapest Price Representation);
  4. (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 (theTop Position Representation);
  5. (c)that the Strike-Through Price was a comparison between prices offered for the same room category in the same hotel (theStrike-Through Representation); and
  6. (d)that the Red Price was a comparison between prices offered for the same room category in the same hotel (theRed Price Representation).
  7. 10The 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 (theadditional conduct allegations).
  8. 11Trivago 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.
  9. 12An 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

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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.

  1. 13The 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 theoffer pricewas 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 (theTop 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.
  2. 14In 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.
  3. 15For the reasons that follow, I have concluded, in summary, as follows:
  4. (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;
  5. (b)that in the making the Cheapest Price Representation, Trivago contravened ss 18 and 34 of the Australian Consumer Law;
  6. (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;
  7. (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
  8. (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.

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THE ORIGINATING APPLICATION, THE CONCISE STATEMENT AND THE CONCISE RESPONSE

  1. 16The ACCC's allegations are set out in its further amended originating application (theOriginating Application) and its further amended concise statement (theConcise Statement). Trivago's response is set out in its concise response to the further amended concise statement (theConcise Response).
  2. 17In 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 (thefirst relevant sub-period), a period of approximately 17 months;

18Consistently with the approach taken by the parties, the website during the first relevant sub- period will be referred to aswebsite version 1...

[19]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 placedadvertisementson 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".

20A 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.

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  1. 21In 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:
  2. (a)misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law; and
  3. (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,
  4. 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.
  5. 22In 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:
  6. (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
  7. (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,
  8. 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:

  1. (a)the Top Position Offers were not always the cheapest available offers for an identified hotel;
  2. (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

....

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(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.

FACTUAL FINDINGS

  1. 43The following factual findings are based on the statement of agreed facts and the other documents admitted into evidence.
  2. Trivago
  3. 44Trivago is incorporated in the Netherlands and is a foreign corporation within the meaning of s 4 of theCompetition and Consumer Act.
  4. 45Trivago carries on business in Australia within the meaning of s 5 of theCompetition and Consumer Actby conducting an online search and price comparison platform for travel accommodation, namely the Trivago website.
  5. Trivago's advertising and marketing
  6. 46During the Relevant Period, Trivago used a number of advertising mediums to advertise its website to Australian consumers.
  7. 47Trivago caused a number of television advertisements to be aired on Australian television networks:
  8. (a)between 28 August 2016 and 29 May 2017, Trivago caused a television advertisement to be aired on television networks in Australia stating:
  9. 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
  10. (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:
  11. Trivago makes it easy for you to find the ideal hotel for the best price ...
  12. You can be sure that you can find your ideal hotel at the best price ...
  13. 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

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(c) between 20December 2016 and 2July 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.

  1. 48The 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.
  2. 49In 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):
  3. Did you notice that there are so many different prices out there for the exact same room?
  4. 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.
  5. Trivago compares prices from more than 200 websites to make sure you find your ideal hotel for the best price.
  6. Hotel? Trivago
  7. 50In the period between 19 December 2017 and 1 April 2018, a television advertisement with
  8. 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):
  9. 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?
  10. Instead, use Trivago to compare these offers and find your ideal hotel for the best price.
  11. Hotel? Trivago
  12. 51I 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.
  13. 52Between 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":

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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

  1. 53Trivago'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.
  2. 54If 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.
  3. 55Trivago 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.
  4. 56Consumers 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.
  5. 57Each hotel listing on the Initial Search Results Page is displayed in substantially the same way, with the features described in [6] above.
  6. ...
  7. The first relevant sub-period (1 December 2016 to 29 April 2018)

62In 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:

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With trivago you can easilyfind 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.)

  1. 63As at 4 January 2018, the top part of the Landing Page appeared as follows:
  2. 64Prior 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".
  3. 65The 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.)

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___________________________________________________________________________

_

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

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  1. 66In 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:
  2. (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";
  3. (b)the Strike-Through Price in red, strike-through text above the Top Position Offer;
  4. (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;
  5. (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");
  6. (e)the Percentage Savings box (if the conditions referred to in [58(a)] above were met); and
  7. (f)the Top Deal box (if the conditions referred to in [58(b)] above were met).
  8. 67Between 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.
  9. ....

APPLICABLE PRINCIPLES

  1. 178Section 18(1) of the Australian Consumer Law states that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. The question of whether conduct is misleading or deceptive within the meaning of s 18 is an objective one:Taco Co of Australia Inc v Taco Bell Pty Ltd(1982) 42 ALR 177 at 202 per Deane and Fitzgerald JJ;Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd(1982) 149 CLR 191 at 198-199 per Gibbs CJ;Campomar Sociedad, Limitada v Nike International Ltd(2000) 202 CLR 45 (Campomar) at [107] per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ.
  2. 179The words "likely to mislead or deceive" in s 18 make it clear that it is not necessary to demonstrate actual deception to establish a contravention:Google Inc v Australian Competition and Consumer Commission(2013) 249 CLR 435 (Google) at [6].
  3. ...

182The principles governing ss 18, 29 and 34 of the Australian Consumer Law are well established, and were recently set out by Gleeson J inOptus Mobile Pty Ltd v Telstra Corporation Ltd[2018] FCA 745 at [13]-[20].

...

  1. 184In relation to the representations part of this case, two steps are required in the analysis (Reckitt Benckiser (Australia) Pty Limited v Procter & Gamble Australia Pty Ltd[2015] FCA 753 at [35] per Gleeson J):
  2. (a)first, the Court must determine whether the facts establish that each or any of the alleged representations were conveyed by the conduct; and
  3. (b)secondly, the Court must determine whether each of the representations that was in fact conveyed was misleading or deceptive or likely to mislead or deceive.
  4. 185In relation to the first step, inAustralian Competition and Consumer Commission v Jetstar Airways Pty Ltd[2015] FCA 1263, in the context of ss 18 and 29(1)(i) and (m) of the Australian Consumer Law, Foster J noted at [39] that where a headline representation is sought to be qualified by other material, the qualifying material must be sufficiently prominent to prevent the headline representation being misleading. The degree of

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prominence required will vary with the potential of the primary statement to be misleading (citingMedical Benefits Fund of Australia Ltd v Cassidy(2003) 135 FCR 1 at [37]-[41] per Stone J, Moore and Mansfield JJ agreeing). In this regard, it is the overall impression created by the representation that must be assessed.

  1. 186The second step involves an objective determination by the Court of the effect of the representations on the ordinary or reasonable members of the class of consumers to whom the conduct is directed:Campomarat [102];Googleat [7] per French CJ, Crennan and Kiefel JJ. Conduct is misleading or deceptive, or likely to mislead or deceive, if it has a tendency to lead into error:Australian Competition and Consumer Commission v TPG Internet Pty Ltd(2013) 250 CLR 640 (TPG) at [39] per French CJ, Crennan, Bell and Keane JJ. As Allsop CJ held inColesat [39], "[t]he causing of confusion or questioning is insufficient; it is necessary to establish that the ordinary or reasonable consumer is likely to be led into error." As this passage indicates, and as the High Court held inCampomarat [105], the focus of the inquiry is on the meaning that would be conveyed to a hypothetical ordinary or reasonable member of the relevant class of consumers. In that context, it is relevant to consider: whether any of the alleged reactions are extreme or fanciful such that they should not be attributed to the ordinary or reasonable members of the class of consumers (Campomarat [105];REA Group Limited v Fairfax Media Limited[2017] FCA 91 at [18] per Murphy J); and whether anot insignificantnumber of consumers are likely to have been led into error (Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 2)[2017] FCA 709 at [42] per Beach J;Australian Securities and Investments Commission v Westpac Banking Corporation (No 2)(2018) 266 FCR 147 at [2279] per Beach J).
  2. 187Whether conduct in relation to a particular class of consumers is misleading or deceptive is a question of fact to be resolved by a consideration of the whole of the impugned conduct in the circumstances in which it occurred:Campbell v Backoffice Investments Pty Ltd(2009) 238 CLR 304 at [24]-[25] per French CJ, at [102] per Gummow, Hayne, Heydon and Kiefel JJ;TPGat [49];Aldi Foods Pty Ltd v Moroccanoil Israel Ltd(2018) 261 FCR 301 at [74] per Perram J.
  3. 188InTPG, French CJ, Crennan, Bell and Keane JJ observed at [50] that misleading or deceptive conduct may occur, not only when a contract has been concluded under the influence of a misleading advertisement, but also at the point where members of the target audience have been enticed into "the marketing web" by an erroneous belief engendered by an advertiser,

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even if the consumer may come to appreciate the true position before a transaction is concluded.

  1. 189The ACCC bears the burden of proof, and must establish its allegations on the balance of probabilities having regard to factors including those referred to in s 140 of theEvidence Act.
  2. APPLICATION OF PRINCIPLES TO THE FACTS OF THIS CASE
  3. 190The 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. The ACCC also alleges that Trivago contravened ss 29(1)(i) and 34 of the Australian Consumer Law. The ACCC's case relates to the Relevant Period, which is broken down into the following relevant sub-periods:

(a) the first relevant sub-period, that is, the period from 1 December 2016 to 29 April 2018;

...

191It is convenient to structure the consideration of the ACCC's case around the four relevant sub-periods. By considering the ACCC's case with respect to each relevant sub-period in chronological order (rather than, for example, considering each alleged representation), one is better able to assess the relevant context for the purposes of considering whether Trivago engaged in the alleged contraventions. However, before considering each of the relevant sub- periods, I will consider the relevant class of consumers.

Relevant class of consumers

192The relevant class of consumers for present purposes is those members of the public looking to book accommodation online. It may be expected that ordinary and reasonable members of this class of consumers have some familiarity with using the internet and making bookings (whether for accommodation or other products or services) online. I would not assume that such consumers have used the Trivago website before or that they have booked accommodation online before. I note that the relevant class is very large, as indicated by the figures set out in [88] above. While those figures do not state the number of consumers who accessed the Trivago website, they indicate that there were a large number of sessions on the website. For example, in the period 1 December 2016 to 3 January 2018, there were 20,039,530 sessions on the Trivago website where the Top Position Offer for any hotel listing was clicked.

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The evidence does not establish how long consumers are likely to spend on the Trivago website. The First Parkes Report [a report provided by Professor David C Parkes, an expert in computer sciences from Harvard University who testified on behalf of Trivago] refers at [131] to a study called "TripAdvisor Insights" which found that the average hotel purchaser spends 191.4 minutes researching online and visits 34 sites before making a purchase. Professor Parkes did not himself carry out a study about this matter and there is a question as to the weight that can be ascribed to it. In any event, I consider it unlikely that many consumers would spend this period of time (or anything approaching it) on the Trivago website. The whole point of the Trivago website, as explained in Trivago's advertising (see, for example, the television advertisement at [3] above) was to save the consumer time by not needing to search many different websites. Further, Professor Slonim's evidence Professor Robert Slonim, a Professor of Economics at the University of Sydney] regarding 'satisficers' suggests that many consumers are likely to interact only briefly with the website.

The first relevant sub-period

  1. 193In respect of the first relevant sub-period, the ACCC alleges the following representations and conduct:
  2. (a)the Cheapest Price Representation;
  3. (b)the Strike-Through Representation;
  4. (c)the Top Position Representation; and
  5. (d)the additional conduct allegations.
  6. 194In relation to the Cheapest Price Representation, the ACCC alleges that Trivago contravened ss18 and 34 of the Australian Consumer Law. In respect of the Strike-Through Representation and the Top Position Representation, the ACCC alleges contravention of ss 18 and 29(1)(i). In respect of the additional conduct allegations, the ACCC alleges contravention of ss 18 and 34.
  7. ....
  8. Cheapest Price Representation

196The terms of the Cheapest Price Representation are as follows. It is alleged that Trivago represented in online and television advertising that the Trivago website would quickly and

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easily identify the cheapest rates available for a hotel room responding to a consumer's search. This representation is alleged only in respect of the first relevant sub-period. ....

  1. 197Trivago's advertising and marketing during the first relevant sub-period (or parts of that period) are described in [46]-[52] above. In particular, I note that:
  2. (a)In the television advertisement that is set out in [3] above (which was aired between 10 January 2016 and 26 September 2017), it was stated that "Trivago makes it easy for you to find the ideal hotel at the best price" and that "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".
  3. (b)In the television advertisement that is set out in [49] above (which was aired in the period 29 June 2017 to 1 April 2018), it was stated that "Trivago compares prices from more than 200 websites to make sure you find your ideal hotel for the best price".
  4. (c)In the television advertisement that is set out in [50] above (which was aired between 19 December 2017 and 1 April 2018), the consumer was urged to "use Trivago to compare these offers and find your ideal hotel for the best price".
  5. 198In each case, when the words "best price" are seen in context, it is clear that they refer to the cheapest price (rather than, for example, the best price taking into account the particular features of the various offers). The television advertisements conveyed that the Trivago website aggregates and displays offers that are comparable apart from price. For example, the advertisements set out in [3], [47(b)] and [49] above state that Trivago is showing you all the different prices "for the exact same room". Further, the focus of the advertisements is on comparing the differentpricesthat are available for a hotel. In this context, the words "best price" would be understood by the ordinary consumer to mean the cheapest price.
  6. 199Further, the television advertisements indicated that the Trivago website wouldquickly and easilyhelp the consumer identify the best price. That was the whole point of the Trivago website. For example, in the advertisement set out in [3] above, it was stated that Trivago "does the work for you and instantly compares the prices".
  7. 200There is no reason to think that the comments set out in the two preceding paragraphs do not apply equally to the other television advertisements described in [47]-[50] above.

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  1. 201The Google snippet set out at [52] above refers both to "the ideal hotel at the best price" and finding the "cheapest price". Thus it contains a representation that the Trivago website would identify the cheapest price. The snippet refers to comparing "over 250 booking sites", suggesting that the Trivago website would quickly and easily help the consumer identify the best price.
  2. 202In light of the above ....it is established that Trivago made the Cheapest Price Representation during the first relevant sub-period. ...
  3. 203In making the Cheapest Price 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. That is because the Trivago website did not quickly and easily identify the cheapest rates available for a hotel room responding to a consumer's search. 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 room did not appear on the Trivago website. This fact alone was sufficient to render the Cheapest Price Representation misleading or deceptive (or likely to mislead or deceive).
  4. 204Further, the expert evidence establishes that the offer that was given most prominence on the website (that is, the Top Position Offer) was in many cases not the cheapest offer for the hotel room. Based on the data they examined, the computer science experts agreed that higher priced offers were selected as the Top Position Offer over alternative lower priced offers in 66.8% of listings. Conversely, 33.2% of listings had a Top Position Offer thatwasthe cheapest offer. (These figures are based on both the offers that were displayed on the website and the offers that were not displayed because they did not meet the minimum CPC. This is because the dataset provided to the computer science experts included all offers, including those that did not meet the minimum CPC.) The explanation for the fact that in many cases the Top Position Offer wasnotthe cheapest offer relates to the role of the CPC in the Top Position algorithm. Although the computer science experts differed in their responses to question 3, even on Professor Parkes's approach, the CPC is a very significant factor in determining the Top Position Offer; it is the second most important factor, with a relative importance of between 33.8% and 44.8% ...
  5. ...

Top Position Representation

  1. 212The 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. I note that the alleged representation has two limbs; it is alleged that Trivago represented that the Top Position Offers were either the cheapest available offers (the first limb) or that they had some other characteristic which made them more attractive than any other offer for that hotel (the second limb).
  2. 213In determining whether that representation was conveyed by Trivago, by the Trivago website, it is necessary to consider the online context as well as the formatting (including fonts and colours) used by Trivago on the website. The Top Position Offer was presented in the far right column, in green, and a relatively large font (compared with the other offers displayed on the Initial Search Results Page). It had white space around it, and there was a green "View Deal" button below it. The green colour has positive associations, suggesting that the consumer should go ahead with this offer. 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. At least until 6 October 2017, there was no contrary indication on the Trivago website. In light of these matters, I consider that, at least until 6 October 2017, 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. Additional support for this finding is provided by some of the internal Trivago documents included in the Court Book, which indicate (as one would expect) an appreciation of the significance of formatting (including fonts and colours) (see, in particular, tabs 77, 85 and 162). For example, in the email at tab 77, an employee of Trivago wrote: "We know as a fact that changing the layout of prices, be it font sizes or colours, has a significant impact on user behaviour and, thus, on conversion."
  3. 214As noted above, 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:
  4. 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

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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.

  1. 215From about 27 January 2018, the text displayed if a consumer's mouse cursor hovered over the Our Recommendations information button stated:
  2. 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.
  3. 216There is a question whether any statement contained in the hover-over would be sufficient to dispel the impression created by the presentation of the Top Position Offer on the website as discussed above, because consumers may not place their mouse cursor over the Our Recommendations information button and thus may not see the hover-over. In any event, the explanation provided by these hover-overs is opaque, and insufficient to dispel the impression created by the presentation of the Top Position Offer. The hover-overs referred to the "compensation paid by the booking site". The hover-overs did not explicitly state that this compensation was being paidto Trivago. Moreover, the word "compensation" does not readily convey the nature of the CPC mechanism, whereby an Online Booking site was required to pay a fee to Trivago each time a consumer clicks on one of its offers. Finally, the hover-overs did not clearly disclose the significance of the CPC in the selection of the Top Position Offer.
  4. ....
  5. 218Accordingly, I consider that, even after the introduction of the hover-over (in connection with the Our Recommendations information 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 ... 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.
  6. 219In 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 s18 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,

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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.

  1. 220Also, 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.
  2. 221Further, 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). ...
  3. ...
  4. CONCLUSION

278For 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

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