Flight Centre fined more than $12 million for price-fixing

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Flight Centre has been fined more than $12 million for attempting to induce three international airlines to enter into a price-fixing arrangement.

Between 2005 and 2009, the travel agent sought to have each airline agree not to offer airfares on their own websites that were cheaper than those offered by Flight Centre.

Following a long-running legal battle, the matter was remitted to the Full Federal Court for determination of penalty, following the Australian Competition and Consumer Commission’s (ACCC) successful appeal to the High Court in December 2016. The consumer watchdog argued that the original penalty imposed in 2014 was not strong enough.

The Federal Court has now ordered Flight Centre to pay penalties totalling $12.5 million – an increase from the original $11 million imposed on the company by the trial judge in March 2014. Both the ACCC and Flight Centre appealed these penalty orders.

However, the ACCC has vowed to continue to push for tougher sanctions.

“The ACCC appealed from the initial $11m 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.

“Flight Centre is Australia’s largest travel agency, with $2.6b in annual revenue. We will continue to argue for stronger penalties which we consider better reflect the size of the company, as well as the economic impact and seriousness of the conduct. Significant, large penalties act also as a general deterrent to other businesses that may be considering such conduct themselves.

“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 Court’s penalty decision comes 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.

What did Flight Centre do?

In March 2012, the ACCC took legal action against Flight Centre, alleging that it attempted to enter into arrangements with Singapore Airlines, Malaysia Airlines and Emirates in relation to the price of international airfares offered online that were cheaper than those offered by the travel agent.

Two years later, Flight Centre was ordered to pay penalties totalling $11 million. The Court found that Flight Centre had attempted to induce anti-competitive arrangements or understanding with the airlines to prevent them from offering international airfares on their websites that undercut the fares offered by Flight Centre.

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