High Court rules in favour of ACCC appeal against Flight Centre
Travel agency Flight Centre could face a multi-million dollar penalty after the Australian Competition and Consumer Commission won a legal appeal against the company accused ot attempting to fix the price of international airfares.
The ACCC first hauled Flight Centre to the Federal Court in 2012 claiming the chain had tried to enter into arrangements with the three airlines so that it could ultimately offer cheaper international airfares.
The ACCC won the case, but Flight Centre successfully appealed in the Full Court of the Federal Court in 2015. The ACCC then appealed to the High Court and won the case in a verdict delivered on Wednesday
It was alleged that Flight Centre attempted to enter into arrangements with Singapore Airlines, Malaysian Airlines, and Emirates in relation to its “Price Beat Guarantee”, which compelled it to beat its competitors’ cheaper fares by $1 and offer its customers a $20 voucher.
“At the core of the matter is the question of whether Flight Centre and the airlines are legally considered competitors,” said ACCC chairman Rod Sims.
“The ACCC has always maintained that they are in competition with one another to sell flights to consumers.”
Flight Centre was originally ordered to pay penalties totally $11 million. It now faces the prospect of paying a similar amount.
In handing down that penalty in 2013, Justice John Logan said 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.
He said 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 travel agency’s fares for those flights.
But the Full Court allowed Flight Centre’s appeal and dismissed the ACCC’s cross-appeal. The High Court ultimately decided in the ACCC’s favour.
The majority of judges rejected the ACCC’s primary case but accepted its secondary case. For this reason the Court decided that each party should bear its own costs in the High Court and for the Full Federal Court appeal to date.
Mr Sims welcomed the High Court’s decision.
“This decision will provide important guidance for the future application of competition laws in Australia to other situations where competing offers are made directly to consumers by both agents and their principals,” he said.
“It is likely to be particularly relevant when businesses make online sales in competition with their agents.”
The matter will return to the Full Federal Court for the determination of the penalty appeal and cross-appeal.
The story High Court rules in favour of ACCC appeal against Flight Centre first appeared on The Sydney Morning Herald.