Federal Court finds that Flight Centre attempted to enter into illegal arrangements with airlines

6 December 2013

The Federal Court has held that on 6 occasions Flight Centre attempted to enter into arrangements with airlines which sought to eliminate differences in air fares so as to fix, control or maintain Flight Centre’s retail or distribution margin. The Commission alleged such arrangements would have lessened competition in the market for the distribution and booking and retail sale of international air fares from Australia.

Logan J found that on each of the occasions, Flight Centre attempted to induce a contravention of s45 of Trade Practices Act 1974, now the Competition and Consumer Act 2010.

The ACCC instituted proceedings against Flight Centre in 2012, alleging that six times between 2005 and 2009, Flight Centre attempted to enter into arrangements with international airlines, Singapore Airlines, Malaysian Airlines and Emirates, in relation to international air fares.  It should be noted that no allegations were made against the airlines.

By way of background, Flight Centre has traditionally operated according to a ‘Price Beat’ Guarantee, where Flight Centre would beat a cheaper airfare offered by its competitors by $1 plus a $20 voucher. As a result of that guarantee, Flight Centre was obliged to match cheaper web fares of its competitors, which in some cases resulted in less revenue for Flight Centre. 

“This is an important judgment for the ACCC and we are pleased with this outcome,” ACCC Chairman Rod Sims said.

“The ACCC was concerned about the effect on competition of Flight Centre’s conduct, which the Court has now found attempted to eliminate differences in the international airfares offered to consumers.”

“The detail of the judgment will be considered carefully before we return to the Court for a hearing as to penalty and the form of orders to be made by the Court.”

The hearing is scheduled for 19 December 2013 in Brisbane Federal Court.

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