DISAPPOINTED BUT RELIEVED - FLIGHT CENTRE REACTS TO END OF PRICE FIXING SAGA

Written on the 16 December 2016 by Lin Evlin

DISAPPOINTED BUT RELIEVED - FLIGHT CENTRE REACTS TO END OF PRICE FIXING SAGA
FLIGHT Centre (ASX:FLT), which has been embroiled in a price fixing court case with consumer watchdog the Australian Competition and Consumer Commission, has issued a statement saying that although it is disappointed with the result, it welcomes the end of the litigation which spans over seven years.

On Wednesday this week, the High Court ruled against Flight Centre on price fixing claims of airline ticket prices.

The ACCC's appeal was upheld by the High Court in relation to Flight Centre's attempt to induce three international airlines to enter into price fixing arrangements between 2005 and 2009.

The case revolves around three airlines, Singapore Airlines, Malaysian Airlines and Emirates, which during that time offered consumers airfares online that were cheaper than those provided by Flight Centre.

The ACCC alleged that Flight Centre induced these airlines into anti-competitive arrangements on fare prices, after it became concerned that they were selling tickets directly to customers at lower rates than the travel agent could offer.

Flight Centre's managing director, Graham Turner, says that while the company is "pleased" the case has now been resolved, it is "disappointed that it has reached this point."

He maintains the company is "not in the business of attempting to make airfares more expensive."

"As an agent that provides considerable advice and help to the travelling public and extensive marketing for airlines, Flight Centre asks for appropriate commissions for suppliers and also reasonable access to all deals that they release to the market," says Turner.

"This is a logical and natural business request for an agent to make to ensure the customers it serves on behalf of airlines are not disadvantaged."

Turner also says that Flight Centre had been fully co-operative with the consumer watchdog prior to litigation commencing, including offering to meet with the ACCC to discuss its concerns.  However, he says that the ACCC rejected these offers and opted for legal action.

"While the ACCC is well within its rights to test the law, we feel that this matter could have been resolved in a more amicable, timely and less expensive way," Turner says.

"The ACCC's willingness to pursue this case without discussion or negotiation is seemingly at odds with the approach it has taken in its recent dealings with the world's largest online agencies."

Turner is referring to the recent agreement the ACCC reached with Expedia and Booking.com to remove clauses from its contracts which stops hotels from undercutting the prices offered by online travel agencies.  These so called "parity clauses" required accommodation providers to provide best price and availability to the online travel sites.

Flight Centre says that it will continue to review the High Court judgment but does not at this stage, believe that there are any further implications for its business given that it voluntarily adjusted its behavior prior to the ACCC initiating legal action against it.

The travel agency now faces penalties to be decided by the Full Federal Court.

The company's share price dropped by 22 cents yesterday to $30.30 per share, but is sitting at $30.73 at 11.30 am AEST today.
 
Author: Lin Evlin Connect via: Twitter LinkedIn

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