International flight price fixing lands Flight Centre a $12.5 million fine

Flight Centre Travel Agency
Australia's biggest travel agency is facing a fine for international flight price fixing. Photo by User: (WT-shared) Shoestring at wts wikivoyage via Wikimedia Commons

Flight centre has had an extended legal battle with the Australian Competition and Consumer Commission (ACCC) regarding the possibility that they attempted to fix the prices of international flights. The long fought battle has come to an end and Flight Centre is being forced to pay $12.5 million in penalties relating to their attempts.

The travel agent’s case refers to their attempt to persuade the businesses Malaysia, Emirates and Singapore airlines to enter a price fixing scheme during the years of 2005 and 2009. The legal battle has been happening for the past 6 year where the journey started at the Federal court and has progressed to the High Court and back again to the Federal Court.

Originally, the ACCC attempted to get penalties issued to Flight Centre in 2012 while alleging that they had attempted to get the 3 airlines to raise the fees of their online bookings during 6 different occasions. The attempted price manipulation on Flight Centre’s behalf was to benefit them as the prices that the airlines offered were considerably lower that what the travel agency was charging.

Flight Centre claims that their approach was innocent and no harm was to come from their negotiations. The ACCC rejected this claim stating that the manner in which the travel agency acted was a deliberate attempt to breach competition law.

In March 2014 the Full Court set a penalty of $11 million for the penalty. The ACCC and Flight Centre both appealed the decision however the ACCC’s claim was that the amount as far too small as the regulator was seeking a figure between $17 million and $22 million. Rod Sims, the ACCC Chairman, stated that the ACCC appealed the initial figure as the penalty wasn’t considered high enough to deter Flight Centre and other businesses from doing something similar in the future.

Sims also said that since Flight Centre is largest travel agent in Australia that turns over $2.6 billion in annual revenue. $11 million is hardly a dent for the large pockets of $2.6 billion. On behalf of the ACCC Sims also mentioned that they will continue to argue for a stronger penalty that fits the size of the business while also considering the seriousness of their actions and the economic impact that the penalties will have.