Post by Banjo on Mar 28, 2014 20:41:48 GMT 7
Flight Centre fined $11m for price fixing
Flight Centre has been fined $11 million for trying to illegally fix prices for international flights by attempting to collude with Singapore Airlines, Malaysia Airlines and Emirates over a four-year period.
The competition regulator, which pursued Flight Centre through the courts, said the outcome of the case would act as a deterrent for other companies considering flouting competition laws.
''We will take action. The courts will back us up and the penalties are about to get higher,'' Australian Competition and Consumer Commission chairman Rod Sims warned on Friday.
The $11 million fine comes after the Federal Court ruled in December that Australia's largest travel company had competed with airlines for the retail or "distribution" margin on the sale of international fares, and had sought on six occasions to stop them from undercutting it on these fares.
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In imposing the penalty on Friday, the Federal Court in Brisbane ruled that there was ''no doubt'' that commercial profit was the driver of Flight Centre's attempt to fix prices.
Mr Sims said the court's finding that Flight Centre had attempted to remove differences in the international fares demonstrated that its own concerns were well founded.
"The ACCC took this action because it was concerned about the potential effect of Flight Centre's conduct on competition and its ultimate impact upon the prices available to consumers," he said.
Mr Sims said stiffer penalties – $10 million or 10 per cent of turnover per breach – would also act as a bigger deterrent.
''Under the new regime, the penalties will be a lot higher in future – that is what we need to get a real deterrent,'' he said. ''If you are a big company, it will make a big difference.''
The regulator did not make any allegations against Singapore Airlines, Emirates or Malaysia Airlines.
In its earlier judgment in December, the Federal Court found that Flight Centre's conduct had formed part of a ''concerted pattern of reactive corporate conduct''.
Justice John Logan said at the time that he considered emails sent in 2009 by Flight Centre managing director Graham Turner as "the most blatant of all the charged attempts to induce''.
Flight Centre intends to appeal the decision and penalty.
The travel company said any appeals were unlikely to be heard until next financial year, which meant that it would include the $11 million penalty in its accounts for the year to June 30.
Flight Centre said the penalty would be partially offset by an unrelated one-off gain.
Mr Turner said the outcome of the case was disappointing but had not brought about the need for fundamental changes to its business as this was carried out several years ago.
''We made these changes proactively after the ACCC launched its initial investigation in 2009 and well before it initiated its test case,'' he said. ''While we are comfortable that we comply with the law, we consider it appropriate to test the decision at an appeal.''
Mr Turner said an appeal would clarify its position and rights as a travel agent.
Flight Centre will also pay part of the ACCC's legal costs.
Read more: www.smh.com.au/business/aviation/flight-centre-fined-11m-for-price-fixing-20140328-35mxt.html#ixzz2xGTAnz00
Flight Centre has been fined $11 million for trying to illegally fix prices for international flights by attempting to collude with Singapore Airlines, Malaysia Airlines and Emirates over a four-year period.
The competition regulator, which pursued Flight Centre through the courts, said the outcome of the case would act as a deterrent for other companies considering flouting competition laws.
''We will take action. The courts will back us up and the penalties are about to get higher,'' Australian Competition and Consumer Commission chairman Rod Sims warned on Friday.
The $11 million fine comes after the Federal Court ruled in December that Australia's largest travel company had competed with airlines for the retail or "distribution" margin on the sale of international fares, and had sought on six occasions to stop them from undercutting it on these fares.
Advertisement
In imposing the penalty on Friday, the Federal Court in Brisbane ruled that there was ''no doubt'' that commercial profit was the driver of Flight Centre's attempt to fix prices.
Mr Sims said the court's finding that Flight Centre had attempted to remove differences in the international fares demonstrated that its own concerns were well founded.
"The ACCC took this action because it was concerned about the potential effect of Flight Centre's conduct on competition and its ultimate impact upon the prices available to consumers," he said.
Mr Sims said stiffer penalties – $10 million or 10 per cent of turnover per breach – would also act as a bigger deterrent.
''Under the new regime, the penalties will be a lot higher in future – that is what we need to get a real deterrent,'' he said. ''If you are a big company, it will make a big difference.''
The regulator did not make any allegations against Singapore Airlines, Emirates or Malaysia Airlines.
In its earlier judgment in December, the Federal Court found that Flight Centre's conduct had formed part of a ''concerted pattern of reactive corporate conduct''.
Justice John Logan said at the time that he considered emails sent in 2009 by Flight Centre managing director Graham Turner as "the most blatant of all the charged attempts to induce''.
Flight Centre intends to appeal the decision and penalty.
The travel company said any appeals were unlikely to be heard until next financial year, which meant that it would include the $11 million penalty in its accounts for the year to June 30.
Flight Centre said the penalty would be partially offset by an unrelated one-off gain.
Mr Turner said the outcome of the case was disappointing but had not brought about the need for fundamental changes to its business as this was carried out several years ago.
''We made these changes proactively after the ACCC launched its initial investigation in 2009 and well before it initiated its test case,'' he said. ''While we are comfortable that we comply with the law, we consider it appropriate to test the decision at an appeal.''
Mr Turner said an appeal would clarify its position and rights as a travel agent.
Flight Centre will also pay part of the ACCC's legal costs.
Read more: www.smh.com.au/business/aviation/flight-centre-fined-11m-for-price-fixing-20140328-35mxt.html#ixzz2xGTAnz00
