Flight Centre fined $11 million

Fined millions for attempting to fix international airfares, Flight Centre's "lowest airfare guarantee" rings hollow.
 
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01.Flight Centre guilty of attempted price fixing

Foreign coins lying on top of a stamped passport

UPDATE (8/5/14): In a game of legal cat and mouse, the ACCC announced today that it would cross-appeal Flight Centre's appeal of a sentence handed down earlier this year in the Federal Court.

The court fined the travel agency $11 million in late March after finding it guilty late last year of attempting to persuade Singapore Airlines, Malaysian Airlines and Emirates to stop offering airfares at lower prices than those the travel agent offered.

The Federal Court found that on six different occasions between 2005 and 2009, Flight Centre attempted to enter into arrangements with the airlines so it would not lose money on its “lowest airfare guarantee”, which promises to beat competitors’ airfares. 

In finding the agency guilty, the court ruled that Flight Centre had tried to induce the airlines into entering an anti-competitive arrangement that would stop the airlines offering cheaper fares to consumers and therefore protect Flight Centre's profit margins.

Over a period of four years, according to the court, there was  “…a concerted pattern of reactive corporate conduct by Flight Centre, reactive to a threat it perceived to be presented by the direct retail offering by airlines of air travel at fares it could not offer to retail customers, as opposed to a series of unrelated, isolated, idiosyncratic aberrations”. 

The ACCC's cross-appeal of the judgment will contend that some of the penalties imposed by the court are insufficient and don't provide adequate deterrence, given the findings about the nature of the conduct and the size and financial strength of Flight Centre.

“The penalties imposed in competition cases are hugely important to deter anti-competitive conduct. The ACCC is concerned generally to ensure that penalties for anti-competitive conduct in breach of the law are not viewed commercially as being an acceptable cost of doing business,” ACCC Chairman Rod Sims said.

The Australian Competition and Consumer Commission (ACCC) originally instituted proceedings against Flight Centre in 2012. 

No allegations of price fixing were made against the airlines.

 
 

 

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