On 4 April 2018, the Full Federal Court ordered Flight Centre Ltd to pay penalties of $12.5m for attempting to induce international airlines into entering price fixing arrangements in the case of Flight Centre Ltd v ACCC (No 2)  FCAFC 53.
Flight Centre entered contractual arrangements with three major international airlines, Singapore Airlines, Malaysia Airlines and Emirates for the sale of tickets on their behalf. The commission arrangements for acting as the agent of those airlines under the agreements were based on a percentage of a published price set by the airline. In this agreement, Flight Centre sought to have the airlines agree to not offer airfares on their own websites that were less than those offered by Flight Centre. Flight Centre advertised a ‘price beat guarantee' to customers. This offer meant that Flight Centre would improve upon any price quoted for an airline ticket by a travel agent or airline.
The three airlines sold tickets on their own websites directly to the public at a price lower than the fare published to travel agents. This required Flight Centre to sell the tickets at a lower price. Flight Centre therefore sought to persuade the three airlines through email communications to stop advertising tickets at lower prices on their websites or advertise the same effective price on their websites so that Flight Centre’s business margins were not affected.
In March 2012, the ACCC instituted proceedings against Flight Centre, alleging that Flight Centre attempted to enter into price-fixing arrangements with the named airlines. The primary judge found that the purpose of communications between Flight Centre and the airlines was the fixing, controlling or maintaining the price for goods or services to be supplied, according to the Trade Practices Act 1974 (Cth) section 45A(1). Additionally, the primary judge concluded that Flight Centre and the other airlines were in competition with each other in two separate markets, namely in respect of booking and distribution services. For more information on the judgement, please read TimeBase's earlier article. The primary judge ordered Flight Centre to pay penalties of $11m. For more information on the penalty decision, please read TimeBase's earlier article.
Flight Centre appealed to the Full Court of the Federal Court from the judgement of the primary judge in relation to the liability and penalty orders, and the ACCC lodged a cross-appeal in relation to the penalties. The Full Court allowed Flight Centre’s appeal and dismissed the cross-appeal. The Full Federal Court found that the impugned conduct did not occur in a market in which Flight Centre and the airlines both supplied services in competition with other as Flight Centre was agent for the supply of international passenger air travel services and thus did not compete with the airlines. For more information on this decision, please read TimeBase's earlier article.
In March 2016, the ACCC appealed to the High Court by seeking special leave to appeal. The High Court rejected the argument that Flight Centre and the airlines were in competition with each other in the markets for distribution and booking services, however identified instead that the relevant market was the sale of international tickets. The High Court’s orders remitted the matter to the Federal Court for the determination of the appeal and cross-appeal to determine the penalty. For more information on the High Court's judgement, please read TimeBase's earlier article.
The Full Federal Court ordered that Flight Centre pay penalties of $12.5 million, which is an increase from the original penalty imposed on Flight Centre by the trial judge in March 2014.
In a, Flight Centre managing director Graham Turner said that they would be considering whether there are grounds for appeal against the fine.
ACCC Chairman Rod Sims said in athat the ACCC’s original appeal was because the original penalty was not a sufficient deterrent. He stated that it was important for penalties to reflect the size of the company and the seriousness of the conduct:
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.
Flight Centre Ltd v ACCC (No 2)  FCAFC 53, published on TimeBase.
Flight Centre Ltd v ACCC  FCAFC 104, published on TimeBase.
ACCC v Flight Centre Travel Group Ltd  HCA 49; 91 ALJR 143, published on TimeBase.
[media release] Australian Competition and Consumer Commission, ‘s,’ 4 April 2018.
Natasha Bita, ‘,’ (The Courier Mail) 5 April 2018.
FREE legislation news, delivered weekly.
Sign up now.#WeLoveLegislation Tweets
NEW information resources - great for training.