High Court loss puts partners in competition

THE distinction between a retail partner and a competitor is under closer reflection this year after Flight Centre’s High Court loss to the Australian Competition and Consumer Commission (ACCC) late in December.

The court’s ruling overturns a previous decision by the Federal Court in 2015 in which Flight Centre successfully appealed against an initial ruling in the ACCC’s favour.

At issue was the consumer watchdog’s allegation that Flight Centre had breached the Trade Practices Act by attempting to influence airlines not to offer lower fares directly to consumers, and whether the agency group and the airlines were legally considered competitors.

“The ACCC has always maintained that they are in competition with one another to sell flights to consumers,” said ACCC Chairman Rod Sims.

The High Court agreed, providing a landmark ruling that may have implications for other situations where competing offers are made to consumers by both agents and their principals.

Flight Centre managing director Graham Turner said the company respected the court’s decision and was pleased the saga had been resolved, though he was disappointed the matter had progressed as far as it did.

“Flight Centre has sought to deliver cheaper airfares to the travelling public for more than 30 years, and is not in the business of attempting to make airfares more expensive,” Turner said.

“As an agent that provides considerable advice and help to the travelling public and extensive marketing for airlines, FLT asks for appropriate commissions from suppliers and also reasonable access to all deals that they release to the market…this is a logical and natural business request,” he said.

Turner pointed to the ACCC’s pursuit of the case “without discussion or negotiation” and said it was seemingly at odds with the approach it took with Expedia and Booking.com in which the websites were allowed to continue preventing hotels from offering cheaper rates direct to the public.

“We expect the OTA agreement may now have to be revisited in light of the decision,” Turner said.

Days later the Accommodation Association of Australia (AAoA) went further, saying the case should be the basis for the ACCC to throw out the Booking.com and Expedia deal.

“If the High Court has the view that competition laws apply to relationships between operators and their agents in the aviation industry, then the same must apply in the accommodation industry,” the association’s chief executive officer Richard Munro said.

“If action isn’t taken to rein in the behaviour of online travel agencies, then ultimately consumers will end up paying more for accommodation,” he said.