Australian Competition and Consumer Commission v Flight Centre Limited (No 3)

The Australian Competition and Consumer Commission (ACCC) brought proceedings against Flight Centre Limited for contraventions of s 76(1)(d) of the Trade Practices Act 1974 (Cth) (now Competition and Consumer Act 2010 (Cth)). The proceedings were instituted for the purpose of obtaining declaratory and injunctive relief and the imposition of civil penalties in respect of Flight Centre's alleged contraventions of the Act. The proceedings were instituted in accordance with the relevant provisions of the Act. The ACCC had investigated Flight Centre's conduct and determined that it constituted a contravention of the Act. The ACCC then brought the proceedings in the Federal Court of Australia. The ACCC's case was based on evidence obtained during the course of the investigation. The ACCC submitted that Flight Centre, a travel agency, had attempted to induce international airlines to make contracts or arrangements with it containing provisions that: (i) the airlines must make all their fares for international passenger air travel available for sale by Flight Centre; (ii) the airlines must pay Flight Centre a retail or distribution margin on all sales of international passenger air travel by Flight Centre; and (iii) the airlines must not sell their international passenger air travel directly to the public at a price less than the nett fare plus the retail or distribution margin. The ACCC submitted that the purpose or likely effect of this conduct was to substantially lessen competition contrary to s 45(2)(a)(ii) of the Act. The Court concluded that the ACCC had established that, on six separate occasions, Flight Centre had contravened the Act in the terms alleged. The Court also concluded that the ACCC was entitled to pecuniary penalties in respect of four of the six contraventions, those occurring after 6 May 2006, and to costs. The ACCC was not entitled to any pecuniary penalty in respect of the contravention occurring on or about 6 August 2005, because the contravention occurred more than six years prior to the institution of the proceeding. The ACCC was also not entitled to any pecuniary penalty in respect of the contravention occurring on or about 6 March 2006, because the contravention occurred within six years of the institution of the proceeding but more than six years after the contravention itself. The ACCC was entitled to pecuniary penalties in respect of the remaining contraventions, those occurring on or about 6 May 2008, 6 December 2008, 6 May 2009 and 6 March 2009. The Court concluded that the ACCC was not entitled to any pecuniary penalty in respect of the contraventions occurring on or about 6 May 2008, 6 December 2008, 6 May 2009 and 6 March 2009 in an amount greater than $10 million per contravention. The Court concluded that the ACCC had not pleaded material facts necessary to entitle it to seek a penalty in an amount greater than $10 million per contravention. The Court concluded that the ACCC's failure to plead the material facts, which it alleged attracted to the contraventions occurring on or about 6 May 2008, 6 December 2008, 6 May 2009 and 6 March 2009, the higher maximum penalty for which s 76(1A) of the Act in its amended form provided, constituted a denial of procedural fairness to Flight Centre. The Court concluded that it was not open to the ACCC to contend at a penalty hearing for the imposition of a penalty in an amount greater than $10 million per contravention, if it had not pleaded the material facts. The Court also concluded that the analogy with the criminal jurisdiction, in which the failure to plead a circumstance of aggravation precludes the imposition of a penalty in an amount greater than the lower maximum penalty, supported the conclusion that the ACCC was not entitled to seek a penalty in an amount greater than $10 million per contravention. The Court concluded that the appropriate penalty to impose was $2 million in respect of each of the contraventions occurring on or about 6 March 2006, 6 May 2008, 6 December 2008 and 6 May 2009 and $3 million in respect of the contravention occurring on or about 6 March 2009. The Court concluded that it was not necessary to grant injunctive relief.