The Australian Competition and Consumer Commission is seeking special leave of the High Court to appeal the decision of the Full Court of the Federal Court of Australia handed down on 31 July 2015, in relation to allegations that Flight Centre Travel Group Limited (Flight Centre) attempted to induce three international airlines to enter into price fixing arrangements.
On 31 July 2015, the Full Court allowed an appeal by Flight Centre against the judgment of the trial judge, Justice Logan. 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 international airfares on their websites which undercut the airfares being offered by Flight Centre.
The Full Court found that there was no separate market for distribution and booking services to consumers and, as a consequence, that Flight Centre and the airlines did not compete with each other in such a market. Instead, the Full Court found that the supply of booking and distribution services was an ancillary part of the supply of international air travel in which Flight Centre acted as agent for, and not in competition with, the airlines.
“The ACCC had brought these proceedings because it was concerned that, if successful, Flight Centre’s actions were likely to have meant that consumers would not have seen the benefit of competition through lower ticket prices offered online by the airlines concerned,” ACCC Chairman Rod Sims said.
“This case also 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.”
Separately, the ACCC has determined not to pursue an appeal from the Full Court’s judgment in proceedings against ANZ Banking Group (ANZ) in which price fixing allegations were dismissed by the Full Court on 31 July 2015.
Background
The ACCC instituted proceedings against Flight Centre in March 2012, 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 operated according to 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 guarantee, Flight Centre was obliged to match the cheaper web fares of the airlines, which reduced the margin obtained by Flight Centre.
The trial took place on 8-12 and 17 October 2012 and judgment was handed down by Justice Logan on 6 December 2013. After a hearing on relief, Justice Logan ordered that Flight Centre pay penalties totalling $11 million.
In April 2014, Flight Centre appealed the liability decision of December 2013, and the penalty imposed in March 2014. The ACCC lodged a cross-appeal in May 2014 in relation to the penalties imposed. The appeal and cross-appeal was heard by the Full Federal Court on 20 November 2014. The Full Court allowed Flight Centre’s appeal in a judgment handed down on 31 July 2015.