Grounded

In Australian Competition and Consumer Commission v Flight Centre Limited (No 3) [2014] FCA 292 the Federal Court has made declarations and ordered that Flight Centre pay aggregate $11 million penalties  for repeatedly attempting to enter into anti-competitive arrangements with three international airlines.

The Australian Competition & Consumer Commission indicates that Flight Centre sought to eliminate differences in the international air fares offered to customers.

Last year in Australian Competition and Consumer Commission v Flight Centre Limited (No 2) [2013] FCA 1313  the Court found that Flight Centre

• competed with international airlines for the retail or distribution margin on the sale of international air fares and 
• had sought on six occasions between 2005 and 2009 to prevent certain airlines from undercutting it on these air fares
• had attempted to induce an anti-competitive arrangement to eliminate differences in air fares so as to maintain Flight Centre’s margins on each of those six occasions. 

It  found that Flight Centre’s conduct, extending over a  four year periods, formed part of

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 [with] the aggravating, adverse consequence of denying a would-be passenger a lower fare for air travel which the airline supplies. 

Logan J stated that he considered the emails sent in 2009 by Flight Centre Chief Executive and Managing Director Graham Turner evidenced “the most blatant of all the charged attempts to induce.”

ACCC Chair Rod Sims commented that

The ACCC took this action because it was concerned about the potential effect of Flight Centre’s conduct on competition and its ultimate impact upon the prices available to consumers.

The Court’s finding that Flight Centre’s conduct attempted to eliminate differences in the international air fares offered to consumers demonstrates the ACCC’s concern was well-founded. 

In the current judgment Logan J stated that

there is no doubt in the present case that commercial profit was the “driver” in Flight Centre’s contravening conduct. Further, it is the nature of such conduct that it is not engaged in in public. Its detection is almost invariably difficult and its investigation and related litigation involves the allocation of considerable public resources.