How Is Visitsotland Breaking European Community Law?
In simple terms governments are not allowed under EC law to provide direct support to undertakings where this would distort competition. eTourism Ltd. (trading as visitscotland.com) majority owned by private sector companies, Tiscover (35%), Partnerships UK (22%)& Atos Origin (7%). By providing government aid in kind, in the form of advertising and marketing of their website and call centre number, we believe VisitScotland are in breach of EC law.
What Happens In Cases Where Goverments Breach EC Law?
There is a procedure whereby anyone can initiate a complaint to the EC commissioner. In the case of VisitScotland, this is being handled by Bond Pearce solicitors who are also processing complaints against VisitBritain and Englandnet for similar reasons. If the complaint is found against VistScotland, the Scottish Executive will be required to cease the illegal aid and may be fined. Compensation for businesses affected may also be required to be paid.
State Aid (definition).
Article 87(1)EC states;" Save as otherwise provided in this treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favoring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.”
Grounds for the Complaint:-
eTourism's core business is the sale of holiday accommodation via its call centre and website, for which service it charges a commission fee of 10% from businesses listed on its database by means of a deposit charged to the consumer on booking.
State Aid to eTourism is provided principally in the form of free advertising of the company's website and telephone number displayed on material promoting Scotland worldwide in all forms of media, including television, to the combined value of millions of pounds per annum.
In addition, it appears to us that State Aid or other anti competitive practice may also be occurring in respect of:-
1. Services of VisitScotland staff in booking operations on the eTourism system.
2. Supplying contact and other details of business customers from the VisitScotland QA database.
3. Promoting participation in the system by agreeing contact terms with eTourism that disadvantage providers who do not do so.
4. Advertising in local and national accommodation guides and other tourism publications.
5. When providing grant aid to businesses via the Challenge fund making the inclusion of free advertising of the website and call centre number a condition.
The savings in operating costs brought about by the above-mentioned State Aid enable eTourism to charge lower rates of commission than other private operators providing the same or similar service, hence distorting the market and competing unfairly.
By transferring business details of accommodation providers, formerly members of Area Tourist Boards to eTourism Ltd. without reference to or agreement by those providers, VisitScotland has effectively enabled eTourism to instantly acquire a clientele almost as large as the original ATB membership allowing it to compete unfairly with other agencies.
By agreeing to contractual terms with eTourism that permit that company to subordinate providers’ business contact details in preference to those of their own call centre, whereby that latter precipitates enquiries and extracts commission, VisitScotland has allowed eTourism to distort the market between itself and providers’ own marketing to the disadvantage of the latter.
HOW TOURISM BUSINESSES CAN HELP.
Follow the link on the home page; send an email to support the EU complaint; add your name to the list of supporters on this site.