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Federal Court green lights dual distribution models
Today, the Full Federal Court has allowed Flight Centre’s appeal, finding that it did not engage in attempted price fixing. The ACCC has been ordered to pay Flight Centre’s costs for both the initial proceedings and the appeal.
In December 2013, the Federal Court found that Flight Centre attempted, on six occasions, to induce three airlines to make collusive arrangements with it in relation to Flight Centre’s retail or distribution margin for air fares for international air travel in the period August 2005 to March 2009. The Court found that both Flight Centre and the airlines competed, at the very least, for “the retail or distribution margin” and that the arrangements that Flight Centre attempted to induce had the purpose and likely effect of being anticompetitive by persuading airlines to “stop undercutting or undermining Flight Centre”. In March 2014, Flight Centre was ordered to pay $11 million in civil penalties. Flight Centre viewed the judgment as containing “errors and inappropriate extensions of the law” and appealed.
The Full Court found there was no separate market for booking and distribution services to consumers and, as a result, Flight Centre and the airlines did not compete in this market. The Full Court found that the supply of booking and distribution services was an ancillary part of the supply of international passenger air travel, and that Flight Centre acted as an agent for the airlines.
Interestingly, the Full Court noted that the existence of an agency relationship does not always mean the parties cannot be in competition with one another.
The Full Court also dismissed the ACCC’s cross-appeal as to the size of the previous penalty.
In a separate judgment, the same Federal Court appellate bench also dismissed the ACCC’s appeal against a decision dismissing its allegations that ANZ had fixed prices with a mortgage broker that distributed ANZ home loans, finding that ANZ was not in competition with the mortgage broker.
These decisions provide more clarity to businesses operating dual distribution models following a period of uncertainty after the different approaches to agency taken in in ACCC v Australian and New Zealand Banking Group Limited  FCA 1206 and ACCC v Flight Centre Limited (No 2)  FCA 1313. See our previous publication: “Dual distribution models at a crossroad: where do the ANZ and Flight Centre cases leave us”?
A detailed analysis of the Full Court’s findings in both cases will follow shortly, after the decisions have been made publicly available.