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Back to court – ACCC renews pursuit of Flight Centre

September 1, 2015 Corporate, Headline News 2 Comments Email Email

egtmedia59The six-year saga of Flight Centre’s court battle with the Australian Competition and Consumer Commission (ACCC) is not yet over. The ACCC has applied for special leave to appeal to the High Court from the Full Federal Court Flight Centre judgment.

Just last month, the retail travel agency group won its appeal in the long-running competition law test case brought against it by the Australian Competition and Consumer Commission (ACCC).

The Full Court of the Federal Court of Australia overturned the judgement that was handed down against Flight Centre in December 2013 in relation to breaches of the Trade Practices Act 1974.https://www.agentconnect.biz/FR/fr/local/process/prehome/choose_country.wadis

Flight Centre had been ordered to pay penalties totalling AUD 11 million in relation to conduct said to have taken place between 2005 and 2009. The judgement in Flight Centre’s favour in early August meant the AUD 11 million, plus interest, was set to be repaid to Flight Centre and was to be included in the company’s financial results for 2015/16.

In addition, the ACCC was ordered to pay Flight Centre’s legal costs for both the initial case and for the subsequent appeal.

Now, however, it could be back to court again. The ACCC is seeking special leave of the High Court to appeal the decision of the Full Court of the Federal Court of Australia handed down on 31 July 2015, in relation to allegations that Flight Centre Travel Group Limited (Flight Centre) attempted to induce three international airlines to enter into price fixing arrangements.

Flight Centre said it was “surprised and disappointed” that the ACCC had launched another appeal in the marathon case.

“We are disappointed that the ACCC has chosen to continue this action and are surprised that the ACCC has not accepted the clear and unanimous judgement of a Full Court that included the highly respected Chief Justice of the Federal Court,” Flight Centre managing director Graham Turner said.

“We will, of course, oppose the action and continue to vigorously defend our position.”

On 31 July 2015, the Full Court allowed an appeal by Flight Centre against the judgment of the trial judge, Justice Logan.  Justice Logan had found that Flight Centre and the airlines competed in the market for booking and distribution services for the retail or distribution margin on the sale of air fares, and that Flight Centre had attempted to induce anti-competitive arrangements or understandings with the airlines to prevent them from offering international airfares on their websites which undercut the airfares being offered by Flight Centre.

The Full Court found that there was no separate market for distribution and booking services to consumers and, as a consequence, that Flight Centre and the airlines did not compete with each other in such a market. Instead, the Full Court found that the supply of booking and distribution services was an ancillary part of the supply of international air travel in which Flight Centre acted as agent for, and not in competition with, the airlines.

“The ACCC had brought these proceedings because it was concerned that, if successful, Flight Centre’s actions were likely to have meant that consumers would not have seen the benefit of competition through lower ticket prices offered online by the airlines concerned,” ACCC chairman Rod Sims said.

“This case also raises important issues for the application of competition laws in Australia in the future, as online offers are increasingly being made directly to consumers by both agents and their principals.”

The ACCC has issued the following background to the case:

The ACCC instituted proceedings against Flight Centre in March 2012, alleging that on six occasions between 2005 and 2009, Flight Centre attempted to enter into arrangements with Singapore Airlines, Malaysian Airlines and Emirates, in relation to international air fares offered by the airlines on their websites.

Flight Centre has traditionally operated according to a ‘Price Beat Guarantee’, where Flight Centre would beat a cheaper airfare offered by its competitors by $1 plus a $20 voucher.  As a result of the guarantee, Flight Centre was obliged to match the cheaper web fares of the airlines, which reduced the margin obtained by Flight Centre.

The trial took place on 8-12 and 17 October 2012 and judgment was handed down by Justice Logan on 6 December 2013.  After a hearing on relief, Justice Logan ordered that Flight Centre pay penalties totalling AUD 11 million.

In April 2014, Flight Centre appealed the liability decision of December 2013, and the penalty imposed in March 2014.  The ACCC lodged a cross-appeal in May 2014 in relation to the penalties imposed.  The appeal and cross-appeal was heard by the Full Federal Court on 20 November 2014.  The Full Court allowed Flight Centre’s appeal in a judgment handed down on 31 July 2015.

Written by Peter Needham

Currently there are "2 comments" on this Article:

  1. gnits says:

    …in this highly new age revolutionized technological electronic selling, nobody can guarantee lowest prices anymore… flight centre should re-invent itself, get rid of the old ways/ guarantees are ancient and dinosaur/ and realign itself to the new order… if airlines are selling lower rates on their sites, then buy from their sites… flight centre making arrangement with the airlines is unfair to small players in the industry… the only acceptable arrangement for agents to make with airlines is to get commission from them… yes flight centre is guilty of unfair practices and competition…

  2. AgentGerko says:

    Hate backing a competitor but all FC did was ask for a level playing field. Airlines expect us to do the hard work for them but then think we’ll be quite happy if they offer cheaper deals direct than they allow agents to sell. Basically they want their cake and eat it too. The ACCC would be better off spending all its money asking the airlines why they still charge enormous fuel surcharges when fuel is a natural part of business and fuel prices are at their lowest in a long long time.

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