Demonstrating Expertise – Structure and Application in Reporting

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This case demonstrates that attention to the structure and language used in expert reporting assists courts in clearly identifying that expert opinions satisfy s 79 of the Evidence Act 1995 (Cth) , and by extension the requirements of the Dasreef and Makita rules.

Background

Australian Competition and Consumer Commission v Trivago N.V. [2020] FCA 16 involved allegations that Trivago had breached section 18 of The Australian Consumer Law (‘ACL’) by misleading visitors to the site into believing that a Trivago search could accurately generate the most cost effective offers for hotel accommodation. [2]

Trivago, a website which allows its users to search for hotel accommodation using city or region, dates of stay, and other search filtering options, had advertised on TV and through their slogan that their search engine could ‘Find your ideal hotel for the best price’ (shortly before changing this to say ‘Find your ideal hotel and compare prices from many websites’).

When customers searched for accommodation on the site using the relevant variables, the site generated a list of hotel accommodation offers, along with booking rates at the same hotel on different booking sites (wotif, amona, booking.com are just some). Trivago’s results interface would give emphasis to a ‘Top Position Offer’—a booking site deal represented as the cheapest option amongst a few booking sites. The site would draw attention to this Top Position Offer by placing the individual offer in a separate column on the far right with the booking site name and the monetary value of its deal in larger and bolded text. [6]

The Australian Competition and Consumer Commission (‘ACCC’) took issue with Trivago on the account of its search engine’s generation of results using the additional ‘Cost Per Click’ variable. ‘Cost Per Click’ (‘CPC’) referred to a fee which online booking sites were required to pay Trivago to display their deals in Trivago searches. Moreover, this fee took the form of a bid on the part of booking sites, with no specification by Trivago as to its ballpark amount other than it should supersede a minimum amount determined by the Defendant. Trivago users were unaware that the site received revenue purely through CPC intake. Trivago also did not specify to online booking sites or its customers the conversion rate of those bids into various degrees of prominence on the Trivago site.

Key Issue

The ACCC brought proceedings on the basis that Trivago did not display offers according to a direct price comparison resulting from a consideration of hotel room rates and features, but rather primarily by reference to the value of the CPC. [13] It claimed that, contrary to its representation that the site could ‘easily identify the cheapest rates available’, Trivago had prioritised offers from sites that paid higher CPC fees and represented them on its site as the cheapest offer amongst booking sites in instances where the ‘top’ offer frequently was not. [14]

The ACCC argued that the customer’s false impression of Trivago’s impartiality and accuracy in its hotel offer comparisons constituted a contravention of the ACL’s Misleading and Deceptive Conduct provisions.

Strength of Consumer Behaviour Evidence

The Commission called Professor Slonim, (a Professor in the School of Economics, Faculty of Arts and Social Sciences at the University of Sydney) to provide evidence on the persuasiveness and effect of the Trivago interface on consumer decision-making.

Trivago sought to dismiss the evidence of Professor Slonim on the basis that his report did not satisfy section 79 of the Evidence Act. The defendant argued that ‘the report only provided personal impressionistic views about the Trivago website’ insofar as they were neither supported by a process of reasoning in the reports nor linked to the expertise of the expert. [148]

The court found that, on balance, the evidence was admissible and not a product of personal impressionistic views [153]. Justice Moshinsky referred to the Full Court judgments in Cat Media Pty Ltd v Opti-Healthcare Pty Ltd [2003] FCA 133 and Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2007] FCAFC 70 to highlight that whilst in many cases, expert evidence on consumer behaviour in purchasing modest everyday items will not be admissible because of its generality, the issue of admissibility of evidence under s 79 of the Evidence Act should nonetheless be assessed on a case-by-case basis and with attention to the expertise and opinions the expert has offered. [155]

On the whole, in assessing whether Professor Slonim’s report was admissible pursuant to s 79 of the Evidence Act, the court underscored key aspects of Professor Slonim’s report which it found indicative of Professor Slonim’s direct application of his expertise to the relevant material facts of the matter.

In particular, Justice Moshinsky turned to features of Professor Slonim’s report which were significant in distinguishing the witness’s opinions and analysis of online purchasing tendencies from layman’s knowledge of their personal use of the website. These features included that:

  1. The report contained  ‘a summary of discipline-specific concepts’ and referenced academic sources which could support the explanations of those concepts as Professor Slonim outlined them in his report; and
  2. Professor Slonim demonstrated the direct relevance of his expertise to the facts of the matter by explicitly applying and referring to the data-analysis concepts outlined earlier in the report. [152]

Overall, the report explicitly proscribed a behavioural economics context in its analysis of travel booking customers’ evaluation, comparison, choice, and purchase when using hotel booking websites. Professor Slonim’s expert opinions focused in particular on the ways in which online hotel booking consumer behaviours naturally deviate from traditional models of consumer behaviour due to consumers’ biased search strategies as well as the effect of website interfaces in creating the false impression of effective search pathways. [153]

Strength of Economic Evidence

Mr Patrick Smith, a partner at RBB Economics, presented evidence on behalf of the Defendant. The court found the bulk of Mr Smith’s report admissible but ultimately gave it little weight.

The court highlighted two aspects of Mr Smith’s report which diminished the persuasiveness of his opinions:

  1. The court found the expert’s use of certain terminology misleading or insufficiently justified. Mr Smith opined that the hotel offers, as they appeared on the Trivago site operated as ‘advertisements’ to customers in the sense that they represented offers carrying a ‘marketing message’ distinct from a direct price and cost-benefit appraisal of each offer. From the perspective of Justice Moshinsky, this comparison of deals on Trivago was not reconcilable with the Trivago’s representations in its commercials that it merely operated as an impartial tool for comparing the value of booking site deals. [172]
  2. The Court also took issue with Mr Smith’s assumption regarding the ability of CPC bids to reflect the quality of hotel booking site deals. Justice Moshinsky found that Mr Smith did not sufficiently account for this claim – the report contained neither statistical research to verify this assumption nor any logical explanation as to how CPC bidding, and therefore payment for greater exposure on the Trivago site, could inherently reflect an intention on the part of the bidding booking site to highlight higher quality hotel services. As the court put it, Mr Smith’s report did not successfully reconcile the difference between ‘the quality of the Online Booking Site’s website and its offer’. [177]

The Decision

The Court ultimately decided in favour of the ACCC. Professor Slonim’s evidence on the persuasiveness of Trivago’s website presentation was given significant weight by the Court in their assessment of whether Trivago had contravened s 18 of the ACL.

In particular, the court was persuaded by Professor Slonim’s views that the perceived inconvenience of a more thorough search for the cheapest and best quality deal (what Professor Slonim identifies as phenomena like ‘precision analysis’, ‘loss aversion bias’, and ‘present bias’) gear consumers towards using ‘short cuts’ that result in ‘deviations’ from making optimal choices. The consumer’s aversion to spending longer hours looking for a deal, and by extension her aversion to changing her mind regarding preferences for deals encountered earlier on in her search, allow interfaces highlighting the value of certain offers (and the loss of value on others) to reinforce a sense of the consumer’s confidence that she has made a more cost-effective choice than she really has.  [158]

Takeaways

  • Expert opinions on consumer behaviour regarding modest everyday purchases is not by default inadmissible because of its generality. Courts will assess what will be admitted as the appropriate application of expertise to material facts on a case-by-case basis.
  • Experts should aim to outline the meaning of the technical terminology they use in their reports. This not only clearly indicates that experts are applying their expertise, but also allows the court to follow experts’ lines of reasoning when those terms or concepts are applied.
  • Courts require clear and logical reasoning to underpin expert opinions, especially where the process of reasoning involves the application of technical or industry-specific concepts. This reasoning functions as an effective aide to courts when they determine whether expert opinions are the result of the experts’ proper application of their expert knowledge onto the facts of the matters, and therefore properly within the scope of s 79 of the Evidence Act.

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