British holidaymakers are likely to have been overcharged for hotel rooms because of a price-fixing scandal involving some of the world’s biggest online travel companies, the Office of Fair Trading said yesterday after an investigation by The Daily Telegraph.

Hotels were effectively banned from selling rooms cheaply, with the huge global online travel agents accused of illicitly setting a minimum price to stop their prices being undercut. Hotels refusing to use the minimum price were threatened with removal from the sites.

Expedia, one of the world’s biggest online travel firms, has admitted it has “engaged in cartel conduct on breach of the law”. It is now co-operating fully with the investigation and is understood to be providing information on its rivals under a “leniency deal”.

Clive Maxwell, the chief executive of the OFT, said the watchdog was awaiting the firms response to the notices.

“We want people to benefit fully from being able to shop around online and get a better deal from discounters that are prepared to share their commission with customers,” said Mr Maxwell.

The OFT can fine companies up to ten per cent of annual turnover worldwide if they are found to have breached competition law by fixing prices.

An email to a website from a senior executive at Radisson illustrated how the hotels tried to enforce “rate parity” so that all internet sites offer the same price.

“Please REMOVE all Radisson Edwardian Hotel product from your site as you are causing us online rate parity issues,” wrote Gail Jordan, a sales director at the hotel company.

“We offer a best online rate guarantee, as do most brands,” Miss Jordan said. “Same room type should be same price across all online distribution.”

Dorian Harris, who runs the online travel company Stoosh, said he had made the complaint after becoming concerned about market manipulation.

“Consumers are seeing best price guarantees on almost every travel website nowadays.

“What they don’t realise is that these companies are only able to confidently guarantee the best rates because they’ve precluded the competition from discounting with legal threats,” said Mr Harris.

A spokesman for Expedia said: “Expedia remains committed to ensuring that it provides consumers with the widest possible choice of travel options at competitive prices and will seek to safeguard its ability to continue to do so in relation to the current regulatory process.”

A spokesman for InterContinental said: “IHG considers its arrangements with the online booking agents to be compliant with competition laws and consistent with the long-standing approach of the global hotel industry. IHG is cooperating fully with the OFT’s investigation.”

InterContinental also runs the Holiday Inn and Crowne Plaza hotels. Booking.com declined to comment.