Australia: Agent v Principal? Agency in Australian competition law

A recent decision by the High Court of Australia found that an agent may be in competition with its principal where certain features arise, such as the agent having the freedom to set its own prices or prioritize its own interests over those of its principal. In the case of ACCC v Flight Centre Travel Group Ltd (2016) 339 ALR 242, the High Court found that Flight Centre Travel Group Ltd (Flight Centre) was in competition with airlines in the market to supply international airline tickets.

As a consequence, companies that operate through agency relationships in Australia should consider whether they may be seen to be in competition with their agent or principal, and whether, as a result, any of their current agency agreements or understandings could be seen to be anti-competitive.


This case was brought by the Australian competition regulator, the Australian Competition and Consumer Commission (the ACCC), against Flight Centre.

Between August 2005 and May 2009, Flight Centre, a leading travel agency business listed on the Australian Stock Exchange, was authorized to sell tickets of various airlines (including Singapore Airlines, Malaysian Airlines and Emirates) under a Passenger Sales Agency Agreement (the PSAA). Under the PSAA, Flight Centre was authorized to sell international airline tickets, paying the airline a nett amount calculated by reference to a published amount which also included an allowance for the travel agent. But the travel agent was not bound to sell a ticket at the published rate – it could sell a ticket for more, or less. The higher above the nett amount that Flight Centre could sell a ticket for, the greater its profit, and vice versa. Relevantly, the PSAA did not exclude the airlines from also directly selling their own tickets.

Over the same period, Flight Centre offered a "price beat guarantee", whereby Flight Centre would beat the price quoted for a ticket by another party, including by an airline on its Australian website.

This created commercial difficulties for Flight Centre when each of Singapore Airlines, Malaysian Airlines and Emirates sold tickets directly to customers at prices less than the nett amounts.

In response to the airlines' prices, a series of emails were sent on behalf of Flight Centre attempting to stop the airlines selling tickets at the lower prices, threatening that Flight Centre would stop selling their tickets unless they complied.

The ACCC alleged that this behaviour contravened section 45(2)(a)(ii) of the Trade Practices Act 1974 (Cth)1 (the Act), by proposing an arrangement or understanding containing a provision which had the purpose and/or was likely to have the effect of fixing or controlling or maintaining prices for the supply of the services which Flight Centre and the airlines were selling in competition with each other.

The most controversial element of the ACCC's allegation was whether Flight Centre was actually in competition with the airlines, which turned on the following issues:

  • market definition; and
  • whether the agency relationship meant that the agent was not in competition with its principal.

The market

The ACCC put forward two alternative cases in relation to the market. First, that Flight Centre and the three airlines competed in a market for the provision of flight distribution and booking services, and secondly, that they competed in a market for international passenger air travel services.

At first instance, the Federal Court of Australia accepted the first proposition and rejected the second, saying that only the airlines supplied flights as they operated the aircraft.

Flight Centre successfully appealed to the Full Federal Court, where the ACCC's alternative cases were both rejected.

But there was a reversal of fortune when the matter was taken to the last point of appeal, the High Court of Australia, which accepted the second of the ACCC's alternative cases, albeit describing the market differently as the "supply of contractual rights to international air carriage to customers" (as opposed to the performance of that contractual right), or more simply, the supply for international airline tickets.

The first of the ACCC's alternative cases was again dismissed, with the attempt to construct the fact that an airline sells tickets directly to its customers as the airline providing itself with a "distribution service" being described as "quite artificial". The Court commented that the booking of a flight, the issuing of a ticket and the collecting of the fare could not be treated as separate elements when they were in fact inseparable elements of the sale of a ticket.

When will an agent be in competition with their principal?

The most contentious point of this case before the High Court was the interaction of the laws of agency and competition. As noted in Chief Justice French's dissenting opinion, "the characterisation of Flight Centre as a competitor of the airlines... was necessary in order to establish the contraventions alleged".

Justices Keifel and Gageler decided that notwithstanding the fact that Flight Centre was acting as the airlines' agent, it was free to prefer its own interests over those of the airlines, to set its own price for the tickets, and to decide whether or not to sell the tickets at all. To the extent that the agent was free to act, and act in its own interest, they declared that "the mere existence of the agency relationship did not in law preclude the agent from competing with the principal for the supply of contractual rights against the principal". In a separate judgment, Justice Gordon added that Flight Centre was engaging in rivalrous behaviours in its own right without reference to the interests of the airlines, thereby not acting as agent but as a competitor.

Thus, the majority decided that where certain factors were in play, such as the agent having freedom to set its own prices and prioritize its own interests over those of its principal, an agent can be in competition with its principal. In this case, they found that Flight Centre was in competition with the airlines in the market to supply international airline tickets.

Chief Justice French dissented, saying that the idea that Flight Centre and the airlines were competing "assumes a concept of competition under the Act which is in tension with that of an agency relationship at law". He focussed on the legal concept of agency, quoting the maxim "he who does an act through another does it himself". He acknowledged that in the trade and commerce context, the term "agent" may not mean an agent at law, but that this was not the case for Flight Centre – Flight Centre was not a broader, "commercial agent", but a legal agent. Chief Justice French said that the relevant activity in this case, the sale of contractual rights to travel on the airlines, lay at the "heart" of the agency arrangement in question. The Chief Justice concluded his dissent by noting that "in relation to the supply of contractual rights Flight Centre's conduct is properly to be regarded as that of the airline".

Commercial impact

The finding that an agent can be in competition with its principal (in certain circumstances), will mean that agents and principals in all industries may need to be more careful about their relationships and interactions. While the Flight Centre case focused on price fixing, agents and their principals could be found to engage in anti-competitive behaviour in other aspects of their relationship as well – for example, in relation to the allocation of distribution zones.

Furthermore, the circumstances in which an agent and principal are found to be competing may broaden in the future. In the Flight Centre case, the agent's freedom to set prices was found to be a compelling factor in proving that the agent and principal were in competition. Even in more tightly contracted agency relationships, where an agent does not have the ability to set their own prices, other freedoms could potentially be used to demonstrate that an agent and its principal are in competition. For example, if the agent sells the principal's service on a more advanced technological platform, this could be seen as evidence of their being in competition with their principal. This in turn may call into question restrictions that exist as part of the principal and agent's commercial relationship, such as the arrangements in relation to price.

We reiterate that companies that operate through agency relationships in Australia should consider whether they may be seen to be in competition with their agent or principal, and whether, as a result, any of their current agency agreements or understandings could be seen to be anti-competitive.


Together with the deeming provision in section 45A(1) of the Act regarding contracts, arrangements or understandings in relation to prices. The Act has since been renamed the Competition and Consumer Act 2010(the Act), with section 45A(1) repealed and replaced with specific prohibitions in relation to cartel provisions which are to similar effect but carry with them more severe potential consequences, including imprisonment.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.