The Australian Competition and Consumer Commission has
accepted court enforceable undertakings from the Korean Inbound
Tour Operator Council of Australia Incorporated after concerns
about agreements entered into by KITOCA members.
In April 2007, KITOCA together with the Government, through
the Korean Action Plan Implementation Group, launched a
voluntary Code of Conduct for Korean inbound tour operators to
comply with. This code sets out a minimum code of ethics in
relation to pricing, factual itineraries, complaint handling,
disclosure of shopping arrangements including commission
payments and appropriate licensing requirements.
However in May 2007, the ACCC became concerned that KITOCA
and some of its members had reached agreements to:
not deal with certain Korean tour operators unless fees
paid to Australian tour operators increased
arrange for certain duty free stores and restaurants in
Australia to not allow entry to Korean tourists on tours
operated by those Korean tour operators, and
impose sanctions via financial fines and boycotts on
KITOCA members who refused to be part of these
The ACCC raised concerns with KITOCA that such agreements
may contravene the price fixing and boycott provisions of the
Trade Practices Act 1974.
Since becoming aware of the ACCC's concerns, KITOCA
has cooperated with the investigations and has undertaken that
cease engaging in the conduct
arrange for trade practices compliance training for its
correspond with each of its members and set out their
responsibilities in terms of sections 45, 45A and 45(4D) of
Acting ACCC Chair, Ms Louise Sylvan, welcomed the
undertakings offered by KITOCA to address the concerns raised
in regards to this matter.
"Tourism is a vital growth industry for Australia which
should be encouraged and the ACCC welcomes steps taken by
KITOCA to introduce a voluntary code to regulate the conduct of
its members and the non-disclosure of commissions paid between
operators in the Korean tourism industry."
However Ms Sylvan said that KITOCA's members need to
be aware that the code is voluntary and ultimately it is up to
individual businesses to decide with whom they will do business
with and any attempts to exclude, boycott or control other
business operators is likely to cause competition concerns.
She added that while the payment of commissions by
businesses to tour operators is not in itself illegal if
appropriately disclosed, businesses need to be careful that
their customers are not misled or deceived as to the true value
of the goods being sold to tourists, and she encouraged
businesses to be transparent in their dealings in relation to
KITOCA is an incorporated association that represents the
interests of inbound tour operators for Korean tourists. KITOCA
has been involved in assisting the Australian Government to
improve the perception of Australia as a destination for Korean
tourists and to improve the standing of the industry. This
followed concerns that Korean tourists visiting Australia were
being taken to 'warehouse duty free stores'
where the prices of goods were grossly inflated due to large
commissions being paid by the store owners to tour operators.
It was believed in the Korean tourism industry that the large
commissions were paid to recover the full cost of conducting
the tours for Korean tourists visiting Australia, as the retail
price did not cover those costs.
These Korean tourists purchased packaged tours at retail
from Korean tour operators in the Republic of Korea. The
inbound tour operators then conducted the tours in Australia
for those Korean tour operators.
In 2005, KITOCA considered obtaining authorisation from the
ACCC to allow it to recommend minimum tour prices for tour
packages, but did not proceed with this option.
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