ACCC and Flight Centre: Special Leave Granted for ACCC to Appeal Federal Court Decision
Tuesday 15 March 2016 @ 9.30 a.m. | Trade & Commerce
As reported in a recent ACCC Media Release, the High Court of Australia has granted the Australian Competition and Consumer Commission (ACCC) Special Leave to appeal the decision of the Full Court of the Federal Court in relation to allegations that Flight Centre Travel Group Limited (Flight Centre) attempted to induce three international airlines to enter into price fixing arrangements in breach of the Trade Practices Act 1974 (Cth) (now called the Competition and Consumer Act 2010 (Cth)) (the Act).
Background
During March 2012, the ACCC instituted proceedings against Flight Centre, 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 offered 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 Price Beat Guarantee, Flight Centre was obliged to match the cheaper web fares offered by the airlines, which reduced the margin obtained by Flight Centre.
The Flight Centre Appeal
In July 2015, the Full Court allowed an appeal by Flight Centre against the judgment of the trial judge. 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 online fares for international airfares on their websites which undercut the fares for those flights which were being offered by Flight Centre.
His Honour found that Flight Centre had contravened the Act and ordered that Flight Centre pay penalties totalling $11 m.
Appeal to Full Court
Flight Centre appealed to the Full Court of the Federal Court from the Trial Judge’s liability and penalty decisions, and the ACCC lodged a cross-appeal in relation to the penalties imposed. The Full Court allowed Flight Centre’s appeal and dismissed the ACCC’s cross-appeal in July 2015.
In overturning the earlier ruling against Flight Centre, the Full Federal Court had found that there was no separate market for flight ticket distribution and booking services, and that the retailer therefore was not operating in competition with the airlines.
This finding will now be reviewed by the High Court after the granting of special leave to appeal.
Comment from the ACCC
The ACCC Chairman Rod Sims said:
“The ACCC is pleased that this matter will be considered by the High Court. This case 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.”
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Sources:
High Court of Australia to hear Flight Centre price fixing dispute – news.com.au
ACCC granted special leave to appeal to the High Court from the Full Federal Court Flight Centre judgment – ACCC Release MR 29/16
