Ian McMahon’s perspective March 2017

Far-reaching ramifications

No sooner had I switched off my PC, tidied my desk and headed off for my Christmas-New Year holiday break than the High Court handed down its decision in the long-running legal stoush between Flight Centre and the Australian Consumer and Competition Commission.

The decision likely gave Flight Centre boss Graham Turner indigestion as he tackled his Christmas pud, for the learned judges found in favour of the ACCC.

They accepted the regulator’s contention that Flight Centre competes with its airline partners. So it breached retail price maintenance laws when it threatened to stop selling airlines which did not give it access to their cheapest fares.

After six years of conflicting decisions as proceedings wended their leisurely and expensive way via the full bench of the Federal Court to the High Court, we now know this: it is illegal for agents to take action against airlines offering fares on their websites that undercut the fares they make available to agents.

Returning from holidays and an indigestion-free double serving of Christmas pud, I can see one great advantage of this ruling. Airlines and other principals may not now feel the need to be quite so gushing in their often mendacious and hypocritical claims of support for travel agents.

I have longed for the day when an airline representative would address a travel agent conference thus: “Dear valued partners if we feel like using our website to undercut your fares we bloody well will.” Especially as they can now add: “And there’s nothing you can do to stop us!”

I don’t anticipate that happening any day soon (sigh). But I do think that the High Court verdict will indeed have, as I suggested last August, far-reaching implications for travel retailing in Australia and, potentially, around the world.

In August I quoted Clayton Utz partner Michael Corrigan saying the ACCC may be alone in the world in trying to apply cartel laws to parity pricing arrangements. He predicted “very significant” consequences for agency arrangements if the commission succeeded. Well, it has succeeded!

So there should be all sorts of fall-out for all sorts of implicit and explicit deals between suppliers and retailers. Vineyard “cellar door” pricing springs to mind.

More germane to the travel industry are arrangements between online travel agents and hoteliers. Is Graham Turner correct in his claim that the ACCC has given a green light to Expedia and Booking.com preventing hotels from undercutting the OTAs’ rates? If so, it is puzzling to say the least. A legal minefield may lie ahead.