Penalties totalling $250,000 have been ordered by the Federal Court against Northaust Auto Hire Pty Ltd, trading as Avis Northern Territory, and Neville Ivey, a former employee of the company, after Australian Competition and Consumer Commission action.
Customers of Avis Northern Territory will also be compensated for the effects of the price fix.
The ACCC filed Federal Court proceedings in Darwin alleging that a number of Northern Territory car rental companies, including Avis Northern Territory, had fixed car rental prices in Alice Springs in contravention of section 45 of the Trade Practices Act.
The court found that from late 1994 until around April 1995, the Alice Springs office of the company stopped offering tourists travelling in the Central Australian region a car rental discount called an 'Ayers Rock Special' after they had reached an understanding with their competitors that they would also stop offering these specials. Neville Ivey was the manager of the company's Alice Springs office during this time and was knowingly concerned in the price fix.
Ayers Rock Specials were offered to many tourists in the off tourist season in Alice Springs whereby they received up to 600 free kilometres per day as part of the rental of a vehicle. After the price fixing arrangement was implemented most car rental consumers received only 100 free kilometres per day, paying 25 cents per kilometre for every kilometre travelled in excess of the daily allowance. This resulted in consumers paying up to $300 more for the rental of their vehicle.
The ACCC acknowledged that both Avis Northern Territory and Mr Ivey had admitted to the price fix, and had agreed to joint submissions which were put to the court. In doing so they had avoided an expensive and time-consuming court case.
Justice Mansfield of the Federal Court ordered that:
Avis Northern Territory pay a pecuniary penalty of $200,000;
Neville Ivey pay a pecuniary penalty of $50,000;
the company and Neville Ivey be prevented, for a period of four years, from making, implementing or being involved in price fixing in the Alice Springs car rental industry; and
the company pay the ACCCs costs of $35,000.
Avis Northern Territory has also provided court enforceable undertakings to the ACCC that it will compensate all of its customers affected by the price fix, and has also agreed to implement a trade practices compliance program for its employees.
"Price fixing is the most serious breach of the Trade Practices Act," ACCC Chairman, Professor Allan Fels, said today. "The illegal conduct was directed largely at tourists travelling to Ayers Rock, which is an 800 kilometre round trip from Alice Springs. In some cases the tourists paid hundreds of dollars more than they should have for their rent a car.
"The ACCC is most concerned if tourists pay excessive prices because of price fixing. Competition ensures that tourists get value for money and are therefore more likely to make a return trip to Central Australia. Tourism is a crucial industry for the Northern Territory and Australian economies, and the ACCC will do everything it can to keep that industry competitive. Australia cannot afford to have the tourist industry damaged by price fixing.
"The ACCC will vigorously pursue such breaches of the Trade Practices Act. Extensive interviews were conducted in Central Australia and many thousands of rental agreements were analysed in order to investigate this matter. The ACCC will have no hesitation in taking similar action should such circumstances occur in the future. These days the Act applies throughout Australia to businesses. I hope this case clarifies this."
The ACCCs proceedings against the other respondents are continuing.
In related developments, Justice Mansfield also ordered that Mr Brian Measey and Mr David Bennett be joined to the proceedings.
Further information Professor Allan Fels, Chairman, (06) 264 2808 or pager (016) 373 536 Ms Lin Enright, Director, Public Relations, (06) 264 2808
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