Australian Competition & Consumer Commission v Flight Centre Travel Group Limited

The Australian Competition and Consumer Commission (ACCC) brought proceedings against Flight Centre Travel Group Limited (Flight Centre) in the Federal Court of Australia, alleging contraventions of section 45(2) of the *Trade Practices Act 1974* (Cth) (now section 47 of the *Competition and Consumer Act 2010* (Cth)). The dispute concerned allegations that Flight Centre had entered into contracts or arrangements with airlines that had the purpose or effect of substantially lessening competition in a market. Specifically, the ACCC contended that Flight Centre had sought to induce airlines to enter into agreements that would prevent them from offering lower prices to consumers who booked directly with the airlines, thereby restricting competition in the market for the sale of international air travel.

The central legal issue before the High Court of Australia was whether Flight Centre's conduct in seeking to prevent airlines from offering lower prices directly to consumers constituted a contravention of the *Trade Practices Act 1974*. This involved determining whether the alleged arrangements had the purpose or effect of substantially lessening competition in the relevant market, which was broadly defined as the market for the sale of international air travel in Australia. The Court also had to consider the interpretation of "contract, arrangement or understanding" and the concept of "purpose or effect" in the context of competition law.

The High Court, by majority, found that Flight Centre had not contravened section 45(2) of the *Trade Practices Act 1974*. The Court reasoned that the conduct in question did not have the requisite purpose or effect of substantially lessening competition. It was held that Flight Centre's actions were aimed at preserving its own business model and commission structure, rather than at preventing competition in the market for the sale of international air travel. The Court distinguished between conduct that restricts competition and conduct that merely restricts a party's ability to compete in a particular way. The majority emphasised that the arrangements sought by Flight Centre did not prevent airlines from competing with each other, but rather sought to regulate the terms on which airlines could sell their services directly to consumers, thereby impacting Flight Centre's role as an intermediary.

The High Court therefore allowed Flight Centre's appeal and set aside the judgment of the Full Federal Court. The proceedings were remitted to the Federal Court for determination of the ACCC's alternative claim under section 47 of the *Competition and Consumer Act 2010* (Cth) concerning alleged contraventions of section 47(1) of the Act.