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"We were completely surprised by the investigation" [started by the Antitrust Authority into the Israel Tourist and Travel Agency Association], the head of the ITTAA, Yossi Fattal, told TheMarker yesterday. "We believe it was based on an error and on a failure to understand the character of the market and the forces operating on it," he said.

On Monday officials from the anti-monopoly watchdog raided the association's offices as part of an ongoing investigation into alleged price-fixing between travel agencies and airlines acting on ITTAA directives. The suspicion is that travel agents have tried to get airlines, including British Airways, Swiss International Air Lines and Air France, to set fixed minimum fees for tickets bought online, in an effort to make Internet booking less attractive and thus encourage travelers to return to bricks-and-mortar travel agencies.

If the allegations are borne out, it would be a violation of fair trade laws.

"It's absurd to claim that travel agents are harming competition in the industry," Fattal said. "The only restrictive practice in the field is that of the airlines - against the agents. The antitrust commissioner has already expressed concern about that practice."

Fattal said that the online market for flight tickets is international in nature, with Israelis purchasing tickets through sites based abroad as well as local ones, and travel agents cannot affect ticket prices around the world.

"The reports claiming that agents tried to pressure the airlines to prevent competition from the Internet is groundless and makes no sense. The tourism industry is among the most sophisticated, free and competitive ones existing, without geographic borders or regulatory restrictions.... Could we demand that Lufthansa levy a fee on its site in the Czech Republic? Any customer using the Internet could get around restrictions imposed by the local market with a single click," Fattal said.

Fattal believes the long running dispute between his association and the airlines is behind the Antitrust Authority probe. "Cooperation among airlines is a global phenomenon whose negative effects are recognized in many places in Europe and the United States," he continued. "The ITTAA has even brought such arrangements, which are directed against travel agents, to the attention of the antitrust commissioner. This information is still on the commissioner's desk."

Criminal airlines

As an example, Fattal cited the fuel tariffs charged by foreign airlines, which are identical although their fuel costs are not. "One might have expected the Antitrust Authority to launch a criminal investigation in this regard against the airlines, not against the travel agents association," Fattal said.

The Antitrust Authority declined to comment on Fattal's remarks.