Quick action by the Australian Competition and Consumer Commission has prevented a group of charter boat operators from fixing, controlling and maintaining the price of cruise trips in the popular Whitsundays area of Queensland.
On Friday in the Brisbane Federal Court, the Whitsunday Charter Boat Industry Association and several of its members accepted that a code of conduct recently entered into by WCBIA members contained parts constituting price fixing in breach of the Trade Practices Act 1974.
The WCBIA is an association of boat owners who offer cruises around the Whitsundays. The cruises are sold through commission agents who regularly discount the cruise ticket prices by foregoing part or all of their commission. Boat owners felt the discounting practices caused disruption to their industry and consequently developed a code of conduct requiring the members and their agents to abide by a number of provisions, including :
- limiting the commission structure payable by operators to agents on the sale of charter boat services;
- limiting the discounting by operators on specified charter boat services;
- limiting the practice of "value adding" by operators;
- requiring agents not to sell member's products at less than the advertised list price, and not to offer any extra incentive to the customer by way of discounting, inclusions or add ons; and
- requiring agents to adhere strictly to the code requirements regarding commissions, discounting and value adding.
The ACCC alleged in its statement of claim that these provisions had the purpose or likely effect of fixing, controlling or maintaining the price for, or a discount, allowance, rebate or credit in relation to services supplied or acquired by the parties to the code of conduct.
"The matter was raised with the ACCC on 5 June 1996 and proceedings were instituted on 17 July 1996", ACCC Chairman, Professor Allan Fels , said today. "After becoming aware of the ACCC's concerns the WCBIA and its members moved quickly to abandon the code of conduct and offered complete cooperation to the ACCCs Townsville office, which investigated the matter.
"Price fixing is prohibited because it restricts or eliminates competition in prices," Professor Fels said. "Without competition, customers eventually end up paying more. The ACCC will take whatever action is appropriate against anyone fixing prices in any markets.
"In most price fixing cases the ACCC seeks penalty under the Trade Practices Act 1974. Companies who are found guilty of breaching the Act can be fined up to $10 million and managers and staff, up to $500,000. In this case, however, the Commission considered penalty inappropriate. This was due, amongst other things, to the fact that the businesses involved were mainly small business operators who engaged in the conduct through an apparent ignorance of the law."
The respondents have agreed to consent to the injunction which restrains them from engaging in similar conduct in future. The Court also ordered the respondents to pay the ACCC's costs of the proceedings as agreed in the sum of $6,500.00.