Flight Centre Ltd v ACCC [2015] FCAFC 104: Anti-Competitive Arrangements Not Induced
Monday 3 August 2015 @ 9.54 a.m. | Legal Research | Trade & Commerce
The Full Federal Court has allowed an appeal by Flight Centre Travel Group Limited and overturned a 2013 decision that saw Flight Centre fined $11 million over six alleged breaches of the then Trade Practices Act 1974 (Now the Competition and Consumer Act 2010 (Cth)). In the case Flight Centre Ltd v ACCC [2015] FCAFC 104, the court found that Flight Centre had not induced anti-competitive arrangements with three international airlines by eliminating the differences in international airfares offered to customers.
Background to the Case
The ACCC launched proceedings against Flight Centre in 2012, alleging that the travel agency, between 2005 and 2009, had attempted on six occasions to enter into arrangements with Singapore Airlines, Malaysian Airlines, and Emirates in relation to its international fares.
Flight Centre’s business operation has traditionally been to beat any cheaper airfares offered by its competitors. It’s ‘Price Beat Guarantee’ promotion offered a one dollar discount off cheaper fares as well as a twenty dollar voucher. As a result of the guarantee, Flight Centre was obliged to match the cheaper web fares of its competitors, which in some cases resulted in less revenue for Flight Centre.
In order to maintain its revenue stream, Flight Centre insisted that the three airlines not offer cheaper prices directly to customers on their websites than those available to the travel agency. The ACCC alleged such arrangements would have lessened competition in the market for the distribution and booking and retail sale of international air fares from Australia.
Original Trial
The Federal Court originally agreed with the ACCC and held that Flight Centre had, on six separate occasions, attempted to enter into arrangements that were akin to price fixing. Logan J found that on each of the occasions, Flight Centre attempted to induce a contravention of section 45 of the Act and acted in an anti-competitive manner. In March 2014 the court ordered Flight Centre to pay penalties totalling $11 million.
On Appeal to the Full Court
The Full Court allowed the appeal from Flight Centre. The key point of the decision was the lack of a separate market in which the travel agency and the airlines could directly compete. As a consequence, Flight Centre and the airlines did not compete with each other in such a market. The Full Court instead found that the supply of booking and distribution services was an ancillary part of the supply of international passenger air travel. To this extent, the Full Court found that Flight Centre acted as an agent of the airlines as opposed to being their direct competitor.
Flight Centre chief executive Graham Turner welcomed the decision and again defended his company's actions. He said:
"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."
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Sources:
Flight Centre Limited v Australian Competition and Consumer Commission [2015] FCAFC 104
