Price Fixing – No joy for the ACCC

Two recent decisions in the Full Court of the Federal Court have provided some clarity to the issue of price fixing between selling agents and principals who may be in competition with each other.

The two scenarios considered by the Court were:

• Flight Centre sells tickets on behalf of various international airlines, and these airlines also sell tickets in the marketplace. Flight Centre tried to control the airline’s cheapest fare to match Flight Centre’s price. Is Flight Centre in competition with those airlines? If so, Flight Centre is not permitted to try to control the airlines’ prices; and
• Mortgage Refunds Pty Ltd sells ANZ mortgage finance products as part of its loan arrangement services. ANZ sought to control the amount of rebate that Mortgage Refunds Pty Ltd offered to customers who ended up with an ANZ finance product.  Was Mortgage Refunds Pty Ltd in competition with ANZ? If so, ANZ cannot seek to control Mortgage Refunds Pty Ltd’s rebate.

 

Collaboration by these selling agents and their principals on prices or rebates was thought to be a form of price-fixing, and the Australian Competition and Consumer Commission (ACCC) took both of these matters to Court.

The Federal Court in each case has found that price fixing did not occur.

Flight Centre v ACCC [2015] FCAFC 104 (31 July 2015)

ACCC argued:

• that Flight Centre and the airlines competed against each other in a market for distribution and booking services, and provision of flights, to the public; and
• that Flight Centre’s attempts to prevent the airlines selling at a lower price was a breach.

 

It was found that Flight Centre acted as agent for, and not in competition with, the airlines. They did not compete in a market for booking and distribution services – rather, Flight Centre was authorised as the airlines’ agent for sell international passenger air travel services for and on the airlines’ behalf. It was therefore found that there was no price fixing as between competitors.

ACCC v ANZ [2015] FCAFC 103 (31 July 2015)

In this case, the primary argument was about whether ANZ and Mortgage Refunds were “competitors” with one another in the same market place – if they are competitors then ANZ cannot be allowed to control the rebate offered by Mortgage Refunds, as this would be price-fixing.

The court found that the services offered by a mortgage broker (in advising consumers on mortgage finance products before selling one) are not the same as those offered by ANZ when the lender supplies mortgage finance products to a consumer. ANZ does not provide loan arrangement services.

Because they are not competitors, no price fixing occurred.

Agents and principals – are they competitors?

It needs to be noted:

• That in each case the broker (Mortgage Refunds Pty Ltd) and the travel agent (Flight Centre) were acting as selling agents, namely an “external distribution channel”, for a principal supplier (the banks and the airlines).
• The court in each of these cases specifically commented that there may still be situations where a product originator that has its own internal distribution division will be in competition with a third party agent who is an external distribution channel.
• The facts of each case needs to be looked it individually.

 

Australian Consumer Law price fixing provisions need close consideration if you are selling another party’s products and are price controlled.  If you need assistance with this consideration for your business contact us. P 02 6215 9100 or E chamberlains@chamberlains.com.au