Ian Mcmahon

IT was listed as Case B15/2016 in the High Court of Australia. It was scheduled to get under way on July 27 in Brisbane. By the time you read this we may know the learned Judges’ verdict – a verdict with farreaching implications for travel retailing in Australia and, potentially, around the world. I refer, of course, to the final round of the six year legal stoush between the Australian Competition and Consumer Commission and Flight Centre. The ACCC accused Flight Centre of attempted price-fixing because the retailer negotiated to stop three airlines (Singapore Airlines, Malaysian Airlines and Emirates) offering airfares lower than it could viably offer. The initial ruling favoured the ACCC but in 2013 an appeal to the Full Federal Court was successful and the competition body was forced to pay Flight Centre’s costs and refund $11 million in fines. The High Court granted the ACCC leave to appeal that decision which hinged on the question of whether Flight Centre was competing with the airlines or acting as their agent. As Clayton Utz partner, Michael Corrigan, has noted: “The ACCC may be the only agency in the world which is trying to apply cartel laws to parity pricing arrangements. If successful the consequences will be very significant for agency arrangements generally”. Evidence of potential international implications came in the form of a written submission from global airline body, IATA, which pointed out that most airlines used the same sales agency agreement that Flight Centre used in its negotiations. IATA argued the ACCC’S case “would lead to the absurd conclusion that Singapore Airlines would engage in price fixing simply by appointing Flight Centre as its selling agent … for a fixed price commission”. The irony in all of this is that I have heard many complaints about Flight Centre from its retail travel competitors. Usually these centre on the chain’s price-cutting activities. But never, ever – not once – have I heard another agent complain about Flight Centre trying to keep prices up or engage in any form of retail price maintenance. And irony of ironies, IATA has come to Flight Centre’s defence. The Australian travel agency giant was not (as it has sometimes claimed) the original disruptor of IATA’S – and the Australian Government’s – attempts to impose airfare retail price maintenance. Jetset’s Isi Leibler, for one, was doing this years before Flight Centre was born. But Flight Centre has certainly played a hugely significant role in creating the cutthroat, competitive airfare market enjoyed by Australian consumers today.