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High Court finds against Flight Centre

by December 14, 2016 General
Australian Associated Press

The High Court has found travel agency Flight Centre tried to engage in anti-competitive conduct, upholding a Federal Court decision that could see the company slugged $11 million.

The competition watchdog launched the initial case alleging Flight Centre sought to induce Singapore Airlines, Malaysia Airlines and Emirates to stop directly offering international airfares at prices lower than it offered.

A majority of High Court judges held that Flight Centre was in competition with the airlines when it attempted to induce each one not to discount the price of international airline tickets sold directly to customers.

The case now returns to the Federal Court for determination of penalty.

The original trial judge Justice John Logan imposed a fine of $11 million, an amount ACCC chairman Rod Sims has since argued was inadequate.

The High Court judges heard Flight Centre acted as an agent to sell international plane tickets on behalf of airlines, receiving a commission for each sale.

It entered preferred airline agreements with Singapore Airlines, Malaysia Airlines and Emirates, with additional incentive commissions.

However, these airlines sometimes sold cheaper tickets directly to customers. That caused problems for Flight Centre because it advertised it would undercut any fare.

Between August 2005 and May 2009, Flight Centre sent a series of emails to the airlines telling them to stop directly offering international airfares at the lower prices.

After negotiations with Singapore Airlines broke down, Flight Centre instructed staff to stop selling tickets on that carrier.

The Federal Court initially found for the ACCC but, on appeal, found for Flight Centre, holding that it wasn’t in competition with the airlines for which it sold tickets.

The ACCC then appealed to the High Court.

This case was one of the last in which retiring Chief Justice John French delivered the lead judgment. He was in the minority, with four other judges allowing the ACCC appeal.