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Pleasant, agency resolve discounting flap

Pleasant, agency resolve discounting flap
By Nadine Godwin
Originally Posted on www.travelweekly.com

NEW YORK -- After severing the link between its Web site and that of a Chicago-based agency in a discounting dispute, Pleasant Holidays called the dustup a "misunderstanding" and welcomed the retailer back in its good graces.

The agency, Foremost Travel & Tours, now is offering 12% off the price of Pleasant's tours.

Foremost had accused Pleasant and other operators of price-fixing for trying to stop it from discounting. But in a letter to Tom Stelter, Foremost's vice president and chief financial officer, Pleasant President Timothy Irwin said the real issue was not discounting per se but a concern that agents not use Pleasant's trademarks and logos in such a way as to give the impression that it was offering the discounts.

Irwin said Pleasant does not "in any way regulate the prices at which travel agents sell our products."

But in an earlier letter to the operator's attorney, Stelter spells out a quite different understanding of Pleasant's intentions.

He said that in January he received Pleasant's "online partner linking agreement," which stated, among other things, that the agency could not use its Web site or any advertising "to promote discounts or rebates on any Pleasant Holidays product ... unless authorized in writing by [Pleasant's president]."

In a follow-up conversation with a Pleasant representative, Stelter said, he was told the operator would no longer allow discounting.
In early March, he said, Pleasant said Foremost was not in compliance with the above terms -- the agency also had not signed the agreement -- and so Pleasant terminated the link between its booking system and the agency's Web site.

These events, along with missives from four other operators warning Foremost against discounting, triggered letters from the agency's attorney, Alexander Anolik, to the Department of Justice and California's attorney general requesting their views on whether the tour firms were guilty of price-fixing.

A Pleasant spokesman recently said agents must not "provide their own rebates or discounts that would negatively impact our pricing. This is nothing more than protecting the integrity of our product."

However, the spokesman said, he erred in not making clear that the concern was about discounting that would undermine Pleasant's approach to pricing. He said Pleasant will permit discounting, provided it sees and approves in advance how the discount is presented.

Since then, Foremost has signed the Pleasant contract -- after scratching out the offending paragraph. At its Web site, users are advised that the discount comes to the client from Foremost after travel is completed.

The other operators targeted in Anolik's letters are Abercrombie & Kent, Butterfield & Robinson, Gogo Worldwide Vacations and Tauck World Discovery. Several travel industry attorneys said they believe the tour firms are on strong legal ground when they require agents to stay within specified pricing parameters.

Attorney Rodney Gould said, "Retail price maintenance is not per se illegal. ... The test is economic reasonableness."
For example, he said, an operator can make the case that it can market its products more effectively if the public does not see the operator as a discounter.

Anolik acknowledged that "there can be a rule of reasonableness defense" when instructing agents on pricing, provided the operators are not colluding and that the same requirements are imposed on all agencies.