After an arduous set of court proceedings, the High Court has ruled in favour of the Australian Consumer and Competition Commission (ACCC) in its seven-year dispute with Flight Centre.
Background
Between 2005 and 2009, Flight Centre made approaches to three airlines over discount fares. The agency was concerned with the fact that Singapore Airlines, Malaysia Airlines and Emirates were selling tickets directly to customers at lower rates than Flight Centre could offer. As such, Flight Centre asked airlines to stop selling tickets at lower prices than those available to travel agents in a series of emails. The agency also threatened to stop selling tickets for the three airlines unless they agreed. Concerned with the actions of the company, the consumer watchdog accused the agency of engaging in anti-competitive conduct.
Flight Centre on the other hand maintained that its actions were only aimed at ensuring customers got the same flight deals as those offered directly by the airlines. In the words of the co-founder and managing director, Graham Turner, “the company is not in the business of attempting to make airfares more expensive”.
The Decision
The key question facing the High Court was whether the airlines and Flight Centre were competing against each other in the same market. In one of his final judgements prior to his retirement, Chief Justice French was in the minority with four of the five justices finding that Flight Centre had breached competition law since they were in direct competition with the airlines.
Impact on the Industry
The High Court decision, which ruled that the retail travel outlet had attempted to engage in anti-competitive conduct, has an important impact on the industry. In particular, it will be relevant when businesses make online sales in competition with their agents. By ruling that agents were direct competition to principals, the High Court effectively challenged Flight Centre to create alternative methods of providing value-add to consumers. Hence, customers are expected to benefit widely from more competitive prices and greater value packages.
Final Thoughts
Since its inception, the ACCC has often been accused as “all talk no action”. This criticism is largely associated with the ACCC’s inability to obtain sufficient evidence to prove breaches of restrictive trade practices provisions of the Consumer and Competition Act. However, this recent High Court case emphasises that the watchdog remains an essential cog in ensuring a fair and equal business landscape.
What are your thoughts on the conduct of Flight Centre and the impact of the ACCC? Let us know by tagging us #lawpath or @lawpath.
