Flight Centre loses airline price-fixing appeal

by Steve Creedy - editor
42
December 14, 2016

Global travel group Flight Centre faces stiff  fines after Australia’s competition regulator won a High Court appeal over allegations of price fixing involving three international airlines.

The Australian Competition and Consumer Commission took action against Flight Centre in 2012, alleging that it attempted to induce  Singapore Airlines, Malaysia Airlines and Emirates to enter price fixing arrangments on six occasions between 2005 and 2009.

The airlines had been offering cheaper fares than Flight Centre’s, which had a “Price Beat Guarantee’’ that forced it to beat fares by $1 and offer a $20 voucher.

According to the High Court judgment, Flight Centre sent a series of emails to the three airlines between 2005 and 2009 in an attempt to get each airline to stop offering international airline tickets directly to customers at prices lower than those published to travel agents.

It went as far as threatening to stop selling the tickets of each airline if that airline did not agree,

The Federal Court fined the travel group $A11m in 2013 after finding it had attempted to induce “anti-competitive arrangements or understandings” with the airlines to prevent them from offering international online fares on their websites which undercut the fares on the Flight centre website.

However, flight centre appealed the decision and it was overturned by the Full Federal Court which found there was no separate market for booking and distributing airline services and that Flight Centre did not compete with the carriers.

The ACCC took the case to the High Court and a judgment delivered Wednesday allowed the appeal. 

The majority opinion was that Flight Centre was in competition with each airline, despite the fact it was also acting as their agents, and its actions contravened the Trade Practices Act.

Each side will bear their own costs because not all of the ACCCs arguments were accepted by the court but the case will return to the federal Court to decide penalties.

"The ACCC pursued this matter because we were concerned that Flight Centre’s conduct in this case affected the competitive process,” ACCC chairman Rod Sims said in a statement. “At the core of the matter is the question of whether Flight Centre and the airlines are legally considered competitors.
“The ACCC has always maintained that they are in competition with one another to sell flights to consumers.”

Sims said the decision would provide important guidance for the future application of Australian competition laws where competing offers were made directly to consumers by both agents and their principal.

Flight Centre managing director Graham Turner said the company was pleased the  long-running saga had been resolved and respected the Court's decision. However, he was disappointed it had reached this point.

"Flight Centre has sought to deliver cheaper airfares to the travelling public for more than 30 years and is not in the business of attempting to make airfares more expensive," he said.

"As an agent that provides considerable advice and help to the travelling public and extensive marketing for airlines, FLT asks for appropriate commissions from suppliers and also reasonable access to all deals that they release to the market.

"This is a logical and natural business request for an agent to make to ensure the customers it serves on behalf of airlines are not disadvantaged."