Jepsen settles price-fixing case for $50K penalty
HARTFORD, Conn. (Legal Newsline) - Connecticut Attorney General George Jepsen announced a settlement on Thursday with two hotel owners and a hotel management company over allegations of price fixing.
The settlement was reached with two related companies, Metro Ten Hotel LLC and McSam Hotel Group LLC, both of Great Neck, N.Y., and Jamsan Hotel Management Inc. of Lexington, Mass. The companies allegedly shared confidential, non-public information, allowing competitors to fix prices for hotel rooms.
Metro Ten owns the Holiday Inn Express in Waterbury, Conn., and Jamsan operates that hotel under an agreement with Metro Ten. McSam owns the Holiday Inn Express and Homewood Suites Hartford Downtown, both on Asylum Street in Hartford, Conn. Sam Chang is a prominent developer of hotels in New York City and is the sole manager and member of both McSam and Metro Ten.
Jepsen alleges that the practice of "call-arounds" allowed competing hotels in close proximity to exchange sensitive competitor information at least once a day about current room rates and occupancy, which in the case of the Waterbury Holiday Inn Express, was used to fix rates for hotel rooms. Fixing rates is a violation of Connecticut's antitrust and unfair trade practices act.
"This agreement will end an artificially imposed practice that drove up room rates at certain hotels," Jepsen said. "The settlement will help to restore a competitive marketplace by providing consumers the opportunity to obtain prices for hotel accommodations that were set by the market, not by collusion."
The terms of the settlement require the companies to pay the state a $50,000 civil penalty and stop "call-arounds" at their three Connecticut hotels, as well as those they operate and own in other states.
The companies did not admit liability as part of the settlement.
Jepsen said that the call-around practice was "widespread and long-standing in the hotel and hospitality industry, both within Connecticut and nationally."
This is the second settlement concerning call-arounds made by Jepsen's office. The first was in April 2010 with the LaQuinta national hotel chain. That company agreed to stop the practice in its hotels and, because of its cooperation, was not required to pay a civil penalty.