The Australian Competition and Consumer Commission has announced that, after an investigation into the development of an online travel agency Zuji, the ACCC will not intervene.
"Zuji is owned by a consortium of airlines including Qantas, Cathay Pacific, Malaysian Airlines, Royal Brunei, China Airlines, Singapore Airlines, All Nippon and Japan Airlines and the US-based online travel agency, Travelocity", ACCC Chairman, Professor Allan Fels, said. "Its purpose is to provide a new, online travel agency service for consumers in the Asia/Pacific region, including Australia.
"Zuji has also stated that it will allow other travel agents access to its technology and applications to support their own branded websites".
The parties first approached the ACCC about the venture in 2000, and continued to provide information to the ACCC as the proposal developed. When Zuji 'soft launched' in July 2002, the ACCC undertook extensive inquiries to identify whether the venture was likely to raise any competition issues.
The ACCC investigated the matter under section 45 of the Act, which prohibits agreements, including some joint venture agreements, which are likely to result in a substantial lessening of competition in a market.
It was found that at present, Zuji appears to be providing a new online competitor to the travel industry that has the potential to deliver a greater choice of service for consumers and a more efficient and competitive market. At the same time, the ACCC has noted some concerns from industry that if consortium members gave favourable treatment to Zuji over other travel agents in negotiating fare access, it could have a detrimental impact on competition between Zuji and other travel agents. It was also suggested that the venture could raise some competition issues if consortium members used it as a vehicle to coordinate the price of airline tickets or foreclosed other airlines from posting fares on the site.
"Given that online travel services are still in the early stages of development and Zuji is a new competitor in this area, the ACCC does not intend to oppose the operation of Zuji in Australia at this stage", Professor Fels said. "Nevertheless, the ACCC will continue to monitor it to ensure that neither Zuji nor its owners, engage in anti-competitive conduct”.
In particular, the ACCC's decision is subject to airlines participating in Zuji continuing to deal with competing travel agencies on fair and non-discriminatory terms, and Zuji providing non-shareholder airlines and travel agents access to Zuji on fair and non-discriminatory terms. Also, the ACCC would investigate further any allegations of collusion or that commercially sensitive information was being passed between Zuji and its shareholders.
The ACCC recognises that e-commerce can deliver great benefits, but that there is potential for collective e-commerce ventures to facilitate anti-competitive coordination between rivals.