Flight Centre fined $12.5 million

Australia’s largest travel agency, Flight Centre Travel Group Ltd (FLT), has been fined $12.5 million after the Full Federal Court of Australia this week found it guilty of rorting airfare pricing systems.

The agency attempted to induce Singapore Airlines, Malaysia Airlines and Emirates into withholding airfares on their website that were lower than the ones offered by Flight Centre.

The price-fixing arrangement was initiated to ensure that Flight Centre ‘lowest price guarantee’ could be ‘guaranteed’.

Initially, FLT was asked to pay $11 million in 2014, but the Australian Competition and Consumer Commission (ACCC) pushed ahead with further charges and sought between $17 million and $20 million.

“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 $2.6 billion 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.”

Mr Sims hopes that the penalty will provide “a general deterrent to other businesses that may be considering such conduct themselves”.

“The ACCC wants to ensure that penalties for breaches of competition laws are not seen as an acceptable cost of doing business,” he said.

“To achieve deterrence, we need penalties that are large enough to be noticed by senior management, company boards, and also shareholders.”

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