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Flight Centre to appeal price fixing verdict
In a ruling likely to have significant implications for the travel industry, the Australian Competition and Consumer Commission (ACCC) has won a case in the Brisbane Federal Court against Flight Centre over price fixing.
The court found Flight Centre guilty of six charges of attempting to induce competitors to enter into price-fixing arrangements.
Flight Centre managing director Graham Turner says the company was surprised by the decision and would seek an appeal.
The ACCC claimed that on six occasions between 2005 and 2009, Flight Centre tried to persuade Singapore Airlines, Malaysian Airlines and Emirates to agree to stop directly offering and booking their international airfares – including over the internet – at prices less than what Flight Centre offered.
The company had a “price beat policy” that states if a customer finds a cheaper airfare, the travel agent will beat it by $1, but the policy created problems for Flight Centre when airlines sold tickets directly to the public at low prices.
The specifics of the attempts were revealed by a series of internal emails, the purpose of which the judgement declares were "naked on the face".
One of the emails, sent to Singapore Airlines in 2006, refers to a preferred agreement with the airline.
“Last year, there were many instances where SQ (Singapore Airlines) either undercut or allowed us an insignificant margin,” the email said.
“These reduced margins this year have made it difficult at times for us to push the agreement from a head office perspective and recognition of this issue will help us to achieve our collective goals.”
In a statement to the Australian Securities Exchange, Flight Centre says it was disappointed with the judgment.
Turner said: “As an agent that provides considerable free advice and help to the travelling public, FLT (Flight Centre) asks for adequate commissions from suppliers and also reasonable access to all deals that they release to the market.
“Having access to all offers is a logical and natural business request for an agent to make to ensure the customers it serves are not disadvantaged."
A penalty hearing is set down for December 19.
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