We have no idea, not a clue. That’s the clear message to the travel industry from Australia’s anti-competition watchdog, which has lost the plot, making two contradictory decisions about the the same issue – the right (or not) of suppliers such as airlines and hotels to offer cheaper prices through their own online channels than they do through retailers.
On the one hand, the Australian Competition and Consumer Commission has relentlessly pursued Flight Centre, taking Australia’s biggest retailer all the way to High Court, accusing it of anti-competitive behaviour by pressuring Singapore Airlines, Malaysia Airlines and Emirate to offer it their lowest fares.
On the other hand, the ACCC has just said in the strongest possible terms different rules apply in accommodation by cutting a deal with the global online travel retail duopoly of Booking.com and Expedia that gives each of these companies the right to stop hoteliers from offering better deals than them on the web.
The two outcomes are completely contradictory – in one case the ACCC has backed the right of suppliers (airlines) to undercut retailers; in the other they’ve said suppliers (hoteliers) cannot offer lower rates than retailers.
No matter which side of the fence you sit it makes no sense – one rule should apply to all. No wonder many in the industry believe the lunatics – led by ACCC boss Rod Sims – are running the asylum.
To get some perspective, it’s worth revisiting the Flight Centre saga, which has been underway in one shape or another for the past three years.
In brief, Flight Centre demanded that airlines allowed it full access to their inventory and the cheapest possible fares, which they were marketing through their websites.
The airlines resisted and there was a fair bit of corporate argy-bargy in which Flight Centre asserted its right as a retailer to sell whatever product it wanted – in other words, if we don’t get your best fares we’ll aggressively promote carriers that will co-operate.
These are typical retailer tactics employed across the industry – and virtually identical to what the big OTAs demand of their accommodation suppliers.
If you undercut us, we’ll pull your product from our sites, which Expedia has done a couple of times, including one famous example involving hotel group Accor.
The ACCC said Flight Centre’s behaviour constituted price-fixing taking the Brisbane-based company to the Federal Court in 2013 and winning the case.
Justice Logan even hit Flight Centre with a galling $11m fine.
Flight Centre immediately appealed to the Full Court of the Federal Court and won handsomely with the fine rescinded and the ACCC told to pay all costs.
However the ACCC rejected the decision and appealed to the High Court, claiming the case “raises important issues for the application of competition laws in Australia as online offers are increasingly being made directly to consumers by both agents and their principals”.
More work for the lawyers, who have made their presentations to High Court and the judges are now considering their ruling, expected early next year.
So, to recap, in this case the ACCC believes the retailer (Flight Centre) has no right to demand access the cheapest fares offered by the suppliers (airlines) through their online channels and cannot pressure them to do so.
That would constitute anti-competitive behaviour, the ACCC claims.
And yet the ACCC has just agreed that it’s OK for the global online retail duopoly of Booking.com and Expedia to do the very same thing.
But you wouldn’t know that by reading the press release issued by the ACCC last Friday, which was headlined: Expedia and Booking.com agree to reinvigorate price competition by amending contracts with Australian hotels.
“They will now be able to offer lower rates through telephone bookings and walk-ins, offer special rates and deals to customer loyalty groups, in addition to offering deals via Expedia and Booking.com,” boasted the ACCC.
Telephone bookings! Walk-ins! Wow, what a breakthrough, go crazy in your two smallest and most under-threat channels.
What about the internet? No mention of that in the release.
Why? Because the ACCC rolled over for a tickle like a little puppy dog and gave the OTA lawyers the only thing they wanted – the right to prevent contracted accommodation suppliers from offering better deals on their own sites.
It’s a bewildering decision, and one that has caused uproar within the accommodation industry, which is now selling majority of its products online.
In a typical example, Best Western Australasia Commercial Director Steve Richards revealed a couple of weeks ago that the web is now its major sales channel.
“The balance has finally tipped – the majority of our business is now coming through the online channels,” Mr Richards said.
He also revealed that call centre volumes were down over the same period, which would come as a surprise to nobody, except the ACCC and its genius lawyers.
What a joke.