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Feds Clear Orbitz Again

A U.S. Department of Transportation investigation into the business practices of online travel site Orbitz discounts claims that the airline-backed ticketing operation is antithetical to competition in the industry and hurts consumers.

Chicago-based Orbitz, developed by a consortium of five major airlines, has drawn wide-ranging criticism from competitors such as Expedia and The Sabre Group's Travelocity as well as outfits like the American Association of Travel Agents.

At one point, the possibility of a Congressional investigation was raised.

But a federal audit of Orbitz has basically cleared the operation, according to a report obtained by the Reuters news service.

The company's practice of requiring participating carriers to post the same fares on Orbitz's Web site that are available on any other Internet locations in order to get a rebate on booking fees hasn't resulted in monopolistic or anti-competitive behavior, according to the report.

In fact, the ability of Orbitz to gain market share is limited by factors such as Orbitz's ticketing fees and the fact that some airlines have decided not to work with the company, the report said.

Transportation Department Inspector General Kenneth Mead reviewed management and business practices that had concerned rivals and found that "Orbitz has not deviated from its commitment to unbiased display of air fares and services," Reuters said.

"Based on our review, we did not find substantive evidence to indicate that the (so-called most favored nation clause in Orbitz's contracts) has resulted in monopolistic or anti-competitive behavior by Orbitz's airline owners and charter associates," the report said.

The audit also found that Orbitz, at 24 percent, has not accumulated sufficient market share to control the online distribution market.

Reuters said the report is not scheduled to be released to the public until later this month. It would be the second boost for the online travel business in two months.

"This report is consistent with the findings in three prior DOT reviews of Orbitz," said CEO Jeff Katz. "It clearly underscores that allegations circulated by Orbitz's competitors are without merit. Now, it's time for everyone to compete in the marketplace for the best fares, rather than in Washington."

Orbitz over the past year has taken steps to broaden access to its fares, but it has been the subject of an intense lobbying campaign by its rivals, who took their case to Capital Hill.

Last September, two formal complaints filed by the travel agents association against the airlines and Orbitz were dismissed by the Transportation Department.

Orbitz, owned by American Airlines, United Airlines, Continental, Delta and Northwest Airlines, aroused concerns from competitors from the get-go.