Flight Centre has been ordered to pay $12.5 million in penalties after being found guilty in court of attempting to coerce three airlines into price fixing arrangements.
The Full Federal Court found that the listed travel group sought to have the airlines not offer fares on their own sites that were below those offered by Flight Centre.
Singapore Airlines, Emirates and Malaysia Airlines were identified as the carriers to which the conduct related.
The hefty penalties bring to a close the lengthy legal proceedings, which were first brought about by the Australian Consumer and Competition Commission (ACCC) in March 2012.
The Federal Court initially ordered Flight Centre to pay penalties worth $11 million, but the company successfully appealed the judgment and penalties. The case then went the High Court of Australia in 2016 before today’s verdict on the matter in the Full Federal Court.
“The ACCC appealed from the initial $11 million penalty orders because it considered that this level of penalty was inadequate to achieve a strong deterrence message for Flight Centre and other businesses,” ACCC chairman Rod Sims said.
“Flight Centre is Australia’s largest travel agency, with $2.6 billion in annual revenue. We will continue to argue for stronger penalties which we consider better reflect the size of the company, as well as the economic impact and seriousness of the conduct. Significant, large penalties act also as a general deterrent to other businesses that may be considering such conduct themselves.”
Mr Sims added: “The ACCC wants to ensure that penalties for breaches of competition laws are not seen as an acceptable cost of doing business. To achieve deterrence, we need penalties that are large enough to be noticed by senior management, company boards, and also shareholders.”
In a statement to the ASX, Flight Centre suggested the verdict was a partial vindication, noting the court rejected claims it had breached the law intentionally.
“This was a complex test case as evidenced by the contrasting judgments during the past six years,” the company’s managing director Graham Turner said.
“Flight Centre at all relevant times believed that it was acting lawfully and that its conduct did not contravene the Trade Practices Act, given that its interactions took place within the context of commercial negotiations as to agency agreements with its principles.
“It is pleased that the court also accepted this point in its decision.”
Mr Turner added that the group is considering whether to once again appeal the verdict.
Flight Centre said that the $12.5 million penalty will not impact its profit guidance for the current financial year, of between $360 million and $385 million.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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