Flight Centre ordered to pay $12.5 million in penalties

The Full Federal Court of Australia has today ordered Flight Centre to pay penalties totalling $12.5 million for attempting to induce three international airlines to enter into price fixing arrangements between 2005 and 2009.

Flight Centre sought to have each airline agree not to offer airfares on its own website that were less than those offered by Flight Centre.

The matter was remitted to the Full Federal Court for determination of penalty, following the ACCC’s successful appeal to the High Court of Australia in December 2016.

The $12.5 million in penalties imposed today is an increase from the original $11 million imposed on Flight Centre by the trial judge in March 2014. Both the ACCC and Flight Centre appealed from these penalty orders.

“The ACCC appealed from the initial $11m 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 $2.6b 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.”

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“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,” ACCC Chairman Rod Sims said.

The Full Court’s penalty decision comes just a week after the OECD released a report which found penalties for breaches of competition law are significantly lower in Australia than other comparable OECD jurisdictions. The report provides valuable insight for discussion about the future of penalties in the context of competition law in Australia.

Background

Penalties imposed

Conduct

Attempt

Airline

Penalty imposed by Trial Judge

(March 2014)

Penalty imposed by Full Federal Court

(April 2018)

March 2006

Second attempt

Singapore Airlines

$2M

$2.5M

May 2008

Third attempt

Emirates

$2M

$2.5M

Dec 2008

Fourth attempt

Emirates

$2M

$2.5M

March 2009

(not the subject of ACCC’s cross-appeal)

Fifth attempt

Malaysia Airlines

$2M

$2M

May 2009

Sixth attempt

Singapore Airlines

$3M

$3M

TOTAL

$11M

$12.5 M

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