ACCC wins High Court appeal against Flight Centre

Internet Retailing

14th Dec 2016

A long-running competition law test case with significant implications for online retailers has reached a new milestone today.

The Australian Competition and Consumer Commission won a High Court appeal in relation to allegations that Flight Centre attempted to induce three international airlines to enter into price-fixing arrangements between 2005 and 2009. The airlines involved offered air fares that were cheaper than those offered by Flight Centre.

The High Court has found the relevant market is for the sale of international airline tickets, and importantly also found that Flight Centre and the airlines competed in that market. This was found to be the case notwithstanding that Flight Centre was an agent for each of the airlines.

“The ACCC pursued this matter because we were concerned that Flight Centre’s conduct in this case affected the competitive process,” ACCC chairman Rod Sims said.

“At the core of the matter is the question of whether Flight Centre and the airlines are legally considered competitors. The ACCC has always maintained that they are in competition with one another to sell flights to consumers,” he said.

“This decision will provide important guidance for the future application of competition laws in Australia to other situations where competing offers are made directly to consumers by both agents and their principals. It is likely to be particularly relevant when businesses make online sales in competition with their agents.”

On this matter, the watchdog group and online travel agency agree, although Flight Centre sees room for improvement in the ACCC’s pursuit of competition law infringements.

“The ACCC’s willingness to pursue this case without discussion or negotiation is seemingly at odds with the approach it has taken in its recent dealings with the world’s largest online travel agencies (OTAs),” Graham Turner, Flight Centre Travel Group’s managing director, said.

“This is evidenced by the recent deal it agreed with the OTAs, specifically Expedia and Booking.com, in relation to hotel deals in Australia,” he said.

“This agreement allows these OTAs to continue to stop hotels from offering cheaper fares to the public via their websites than they were making available to those OTAs, but we expect the OTA agreement may now have to be revisited in light of the decision.”

The decision today follows a decision made by the Federal Court in favour of the ACCC in December 2013, which Flight Centre successfully appealed in the Full Court of the Federal Court in July 2015. The ACCC then appealed to the High Court.

The matter will now return to the Full Federal Court for the determination of the penalty appeal and cross-appeal brought by the parties.

Editor’s note: This article was updated on 14 December at 17:10 with comment from Flight Centre.