Flight Centre ordered to pay $12.5 million for price fixing

Internet Retailing

4th Apr 2018

Flight Centre has been ordered to pay penalties totalling $12.5 million for attempting to induce three international airlines to enter into price fixing arrangements between 2005 and 2009.

The travel agency sought to have each airline agree not to offer airfares on its own website that were less than those offered by Flight Centre.

Today’s ruling was delivered by the Full Federal Court today, following the ACCC’s successful appeal to the High Court of Australia in December 2016.

The $12.5 million in penalties is an increase from the original $11 million imposed on Flight Centre by the trial judge in March 2014. Both the ACCC and Flight Centre appealed from these penalty orders.

“The ACCC appealed from the initial $11 million penalty orders because it considered that this level of penalty was inadequate to achieve a strong deterrence message for Flight Centre and other businesses,” ACCC Chairman Rod Sims said.

Sims noted that Flight Centre is Australia’s largest travel agency, with $2.6 billion in annual revenue. He said the consumer watchdog will continue to argue for stronger penalties that better reflect the size of the company and the seriousness of its conduct.

“Significant, large penalties act also as a general deterrent to other businesses that may be considering such conduct themselves,” he said.

“The ACCC wants to ensure that penalties for breaches of competition laws are not seen as an acceptable cost of doing business. To achieve deterrence, we need penalties that are large enough to be noticed by senior management, company boards, and also shareholders.”

The Full Court’s penalty decision comes just a week after the OECD released a report which found penalties for breaches of competition law are significantly lower in Australia than other comparable OECD jurisdictions.