Vendetta or just cause? I’m referring to the ACCC’s determination to get Flight Centre for price fixing, a crusade that has now reached the ultimate battleground – the High Court of Australia, where the country’s most senior lawmakers will determine whether an everyday travel industry occurrence is legal or not.
And that everyday occurrence is the insistence by retailers, in this case Flight Centre, that suppliers give them access to their best possible prices and product rather under-cutting them on the open market (the internet).
If they don’t it is understood by both sides that there will be repercussions. At the extreme end the retailer may refuse to promote or even sell the offending supplier’s product any more.
It’s something that happens all the time – especially between online travel agents and the major hotel groups – and is often written into distribution contracts.
But the ACCC has chosen to use Flight Centre as an example because it says 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”.
The ACCC essentially alleges that Flight Centre illegally used its enormous market power to prevent carriers Malaysia Airlines, Singapore Airlines and Emirates from under-cutting it on the same airfares the company was selling through its vast agency network.
Flight Centre argues that it was simply attempting to get deserved access to all of the airline products, including their cheapest airfares – which above everything else is what consumers want to buy.
So far the case has been tried twice.
In the first case Justice Logan found that Flight Centre and the airlines were competitors in the airfare sales market and that Flight Centre had abused its market power to prevent Singapore Airlines, Malaysia Airlines and Emirates from under-cutting it.
Flight Centre was fined $11m and its reputation besmirched.
The retail giant immediately appealed the decision to the Full Court of the Federal Court.
On this occasion, the “Full Court found that there was no separate market for distribution and booking services to consumers and, as a consequence, that Flight Centre and the airlines did not compete with each other in such a market”.
How can you not be competitors when you’re fighting for the same consumer?
How can you not be in the same marketplace when you are competing directly against each other on the internet?
It doesn’t doesn’t make what Flight Centre did wrong though, they were simply trying to protect their turf, something the ACCC sees as an attempt to “induce three international airlines to enter into price fixing arrangements”.
Now the High Court has granted the ACCC leave to appeal and its decision will be final – there is nowhere else this case can go.
Therefore the implications are enormous; an irreversible precedent will have been set no matter which party wins and have a ripple effect across the internet.
That’s why the ACCC chairman Rod Sims is on this mission but for Flight Centre and founder Graham Turner the stakes are even higher.
There’s no doubt he sees it as a vendetta, while Sims reckons he has just cause.
We’ll know who is right in due course.