Law360 (April 4, 2018, 2:01 PM EDT) -- An Australian appeals court on Wednesday backed an enhanced AU$12.5 million ($9.6 million) fine on travel service Flight Centre Ltd. for trying to convince three airlines to increase their airfares, following a yearslong campaign from the country’s competition authority.
The Australian Competition and Consumer Commission has been trying to win an increase in the penalties imposed on Flight Centre for four years, after a 2014 Federal Court ruling that it had tried to convince three international airlines they should increase their prices to match Flight Centre’s. In a statement on its website, the ACCC said it had appealed to the High Court of Australia because it considered the original AU$11 million (then $10.3 million, now $8.4 million) fine too low.
The High Court sent the question of penalties back to the Full Federal Court, which rendered Wednesday’s decision.
The ACCC originally sued the company in 2012, claiming the travel service— the country's largest— tried six times between 2005 and 2009 to get Singapore Airlines Ltd., Malaysia Airlines and Dubai-based airline Emirates to go in on an agreement to fix prices.
"The ACCC wants to ensure that penalties for breaches of competition laws are not seen as an acceptable cost of doing business," ACCC Chairman Rod Sims said in the statement. "To achieve deterrence, we need penalties that are large enough to be noticed by senior management, company boards, and also shareholders."
Representatives for Flight Centre could not be immediately reached for comment Wednesday.
Flight Centre tried to convince the airlines to agree to stop selling flights directly to customers at prices lower than those the service was offering, the ACCC said. Since the watchdog said the travel agent was directly competing with the airlines' internal sales departments, the proposed agreement amounted to an illegal effort to fix prices.
The company's pricing system includes the base rate of the airfare plus a commission, the ACCC said. The plot to fix prices would have ensured Flight Centre, which offers a lowest airfare guarantee to customers, would continue to rake in the commissions, the ACCC said.
Flight Centre is Australia’s largest travel agency, according to the ACCC, with more than $2.6 billion in annual revenue. The ACCC statement said it will continue to push for fines that reflect both the egregiousness of alleged conduct and the size of the entity.
The ACCC has been pushing for more hefty fines recently, and noted in its statement that an OECD report found Australia lacks a structured system for determining fines for antitrust violations and that those fines were as much as 12 times lower than fines for similar violations in other countries.
Competition penalties are currently determined by Australia’s courts based on an “instinctive synthesis” of factors, according to the Australian commission's website. Unlike in many other countries, as noted by the report, the ACCC cannot set penalties on its own.
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