ACCC Cross-Appeals Penalty Judgment Against Flight Centre
Tuesday 13 May 2014 @ 10.05 a.m. | Trade & Commerce
The Australian Competition and Consumer Commission (ACCC) has lodged a cross-appeal in relation to a penalty judgment of the Federal Court on 28 March 2014 ordering Flight Centre Limited (Flight Centre) to pay penalties totalling $11m for repeatedly attempting to enter into anti-competitive arrangements with three international airlines to eliminate differences in the international air fares offered to customers.
In a judgment handed down on 6 December 2013, the Court found that Flight Centre competed with international airlines for the retail or distribution margin on the sale of international air fares and that, on six occasions between 2005 and 2009, Flight Centre, by seeking from certain airlines not to undercut it on these airfares, had attempted to induce an anti-competitive arrangement with those airlines to eliminate differences in air fares so as to maintain Flight Centre’s margins on each of those six occasions.
Background
The ACCC instituted proceedings against Flight Centre on 9 March 2012, alleging that six times between 2005 and 2009, Flight Centre attempted to enter into arrangements with international airlines, Singapore Airlines, Malaysian Airlines and Emirates, in relation to international air fares.
The trial took place on 8-12 and 17 October 2012 and judgment was handed down on 6 December 2013.
The penalty hearing occurred on 18-19 December 2013 and 7 February 2014. Judgment was handed down on 28 March 2014 in which orders were made that Flight Centre pay penalties totalling $11m.
Appeal by Flight Centre
Flight Centre lodged an appeal and in a statement to the Australian Securities Exchange (ASX), the travel agency said the Federal Court’s judgment contained “errors and inappropriate extensions of the law”.
The statement by Flight Centre said:
“… The penalties are manifestly excessive given the circumstances and the lesser penalties handed down in other cases, where the law was knowingly breached and there was a clear impact on the market.”
In the statement to the ASX, Flight Centre managing director Graham Turner said he looked forward to the appeal and believed it would be heard later this year.
The ACCC’s cross-appeal in relation to the penalties imposed follows an appeal by Flight Centre against both the judgment handed down on 6 December 2013 and against the subsequent penalties imposed on Flight Centre on 28 March 2014. Penalties totalling $11m were imposed on Flight Centre in relation to five of the six established contraventions. It is noted that no pecuniary penalty was imposed for the first contravention, as it occurred more than six years before the commencement of the proceeding.
The ACCC’s cross-appeal will contend that four of those penalties imposed do not provide adequate deterrence, given His Honour’s findings about the nature of the conduct and the size and financial strength of Flight Centre.
The Chairman of the ACCC, Rod Sims said:
“The penalties imposed in competition cases are hugely important to deter anti-competitive conduct. The ACCC is concerned generally to ensure that penalties for anti-competitive conduct in breach of the law are not viewed commercially as being an acceptable cost of doing business.”
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Sources:
ACCC Media Release MR 107/14
Article by smartcompany.com.au
