Critical Analysis: ACCC v Jetstar Airways & Consumer Protection

This case study provides a comprehensive analysis of the Australian Competition and Consumer Commission (ACCC) v Jetstar Airways Pty Ltd case, focusing on the implications of the Australian Consumer Law. The case revolves around Jetstar's misleading advertising practices, specifically drip pricing, where the advertised price of air tickets was significantly lower than the final price due to undisclosed surcharges. The court found Jetstar in violation of sections 18 and 29A of the Australian Consumer Law, although pecuniary penalties were not directly applicable under these sections. The analysis includes a review of the court's decision, its consistency with previous case laws such as ACCC v Woolworths and ACCC v Westminster Retail, and the legal significance of the decision in reinforcing consumer protection. The case underscores the importance of transparent pricing and truthful advertising in business practices, highlighting the ACCC's role in enforcing consumer rights and fair trade within Australia. The document also references section 224 of the Act, discussing penalties and the interpretation of the law. The case's legal significance lies in its clear interpretation of key sections of the Consumer Act and its impact on future business conduct, particularly in preventing drip pricing tactics.

Running head: COMPETITION AND CONSUMER LAW
Australian Competition and Consumer Commission v Jet star Airways Pty Limited (No 2)
[2017] FCA 205
Name of the Student
Name of the University
Author Note

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Table of Contents
Brief of the case:..............................................................................................................................2
Accurate description:.......................................................................................................................2
Court’s decision:..............................................................................................................................3
Previous case study:.........................................................................................................................4
Legal significance of the case:.........................................................................................................5
Reference:........................................................................................................................................6

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Brief of the case:
The subject matter of the case is based on the provisions of the Australian Consumer
Law. The main rationale of the Act is to ensure fair trade process within the territory of
Australia. Further, the ultimate aim of the Act is to secure the interest of the consumers at large.
Certain code of conducts has been mentioned under the Act that should be followed up by the
companies. Australian Competition and Consumer Commission are empowered to regulate the
conduct of the traders. In the case of Jet Star Airlines Pty Ltd, it has been observed that the
company has published certain advertisements regarding the fair price of the air tickets in their
website and mobile site. Many consumers were attracted to the price list and bought tickets.
After certain times, it has been observed that the real price of the tickets was too high compare to
the price mentioned in the advertisement. According to ACCC, the company was engaged in drip
pricing, which is against the policies of the Australian Consumer Act and therefore, the
commission sued the company. Further, it has been observed by the court that the company has
failed to act in good faith. The poster regarding the price was false and misleading and the
company had failed to disclose the entire extra surcharges imposed on the posted price.
Accurate description:
Considering the matters mentioned in given case study, it has been observed that the acts
of the company has attracted the provision of section 18 of Australian Consumer Law (Dietrich
2015). According to this section, if a company imposes additional taxes on the consumers, the
business will not fall under the provision of section 16 and section 17 of the Act.

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Further, the company was held liable for the drip pricing. The chairperson of ACCC
explains the term drip pricing as follows:
“The conduct which was the subject of the ACCC’s allegations in both of these
proceedings is an example of what is often referred to as ‘drip pricing’. Drip pricing is where a
headline price is advertised at the beginning of an online purchasing process and additional fees
and charges (which may be unavoidable or applied in most transactions) are then incrementally
disclosed (or ‘dripped’). This can result in consumers paying a higher price than the advertised
price, spending more than they realize and making it more difficult to compare offers.”
Therefore, it can be said that the airplane company has deceived the customers by publishing
wrong information regarding the price of the tickets.
Court’s decision:
Learned presiding officer of the case has pronounced order against the Airlines Company
and it has been observed by him that the Airlines Company has failed to perform their acts in
accordance to Australian Consumer Law. The judgment made by the Court regarding this case
can be divided into certain parts. The court was of the view that the statement made by the
company in their website was false and the company did not publish all the price charts
regarding the ticket fare for attracting the customer. The company had mentioned only a portion
of the fare of the tickets and when the passengers were booked their tickets, they found a
yawning gap in between the posted price and original price (Corones, Christensen and Howell
2016). Further, the company has made false representation in the mobile site of the company too.
The court observed that the company has failed to perform his duties and the acts of the company
have attracted the provisions of section 18 and section 29A of the Australian Consumer Act.

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However, according to both the section, no pecuniary penalties could be imposed on the
breaching parties. However, an exception to the penalties has been made under section 224 of the
Act. The court has interpreted the contents of section 224 of the Act and according to the section,
if any party especially a body corporate contravenes the provision of section 29A, he will be held
liable to pay the pecuniary damage sustained for the party (Hunt 2015). However, it has been
observed in this case that the Airlines Company has accepted the penalties imposed by the
Australian Competition and Consumer Commission (ACCC) and asked to pay the penalties in
proper way.
Previous case study:
While making judgment on the case, both the sides had mentioned certain case studies in
their favor respectively. The most cited case law in this case was Australian Competition and
Consumer Commission v Woolworths limited [2016] FCA 44 and Australian Competition &
Consumer Commission v Westminster Retail Pty Ltd (2005) ATPR 42-084. The Airlines
company has contended that the false statement published by them are not serious in nature.
However, the court had rejected the prayer based on the case study of Universal Music Australia
Pty Ltd v Australian Competition & Consumer Commission (2003) 131 FCR 529.
In the case of ACCC v Westminster Retail Pty Ltd [2005], an interpretation of section
224 has been made and it has been held that section 224(4) of the Consumer Law allows
pecuniary penalties imposed upon the contravener. The court has held that the company is
required to pay two damages to the consumers. However, it has been contended by the Airlines
Company that both the false statements published in the website and mobile site are close to each
other by their nature and therefore, the company should pay one damage and not two. The court

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has ordered that the velocity of the damages were too effective in this case and the consumers
had to face lots of trouble due to the same. Therefore, the company has to pay double
compensation according to the law. It has been mentioned that section 18 and section 29A of the
Act do not impose pecuniary penalties on the parties. However, it has been mentioned in ACCC
v Woolworths Limited [2016], where compensation is the only option for contravening parties,
the parties will be liable under section 224 of the Act and have to pay the compensation to the
victims. Further, according to the case law, the parties should have certain knowledge about the
misconduct they are performing. Therefore, the court has taken a note of this case in this regard.
Further, it has been mentioned in Universal Music’s case that the risk generated from each posts
are serious in nature and the common consumers had to face trouble due to the same.
Considering the effectiveness of the case, no discount regarding the penalties should be allowed.
Legal significance of the case:
The case is significant in nature, as the effectiveness of the Consumer law has been
established by this case. Further, the applicability of section 18, section 29A and section 224 of
the Consumer act has been analyzed in this case. A clear interpretation of those sections has been
made and it has been observed that no financial penalties can be imposed on the contravening
parties under section 29A of the Act, but the same can be imposed under section 224 of the Act
(Jones 2015). It has been argued by the alleged company that the misconducts committed by the
company are similar in nature and therefore, they had prayed for a single penalty order.
However, they had failed to prove the similarity of the offence and held liable for the same. It
has been observed that the company has failed to act for the best interest of the consumers and
they have engaged in drip pricing. This case has pioneered the future acts of the companies by
establishing the ideology of Australian Consumer Law.

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Reference:
Australian Competition & Consumer Commission v Westminster Retail Pty Ltd (2005) ATPR
42-084
Australian Competition and Consumer Commission v Woolworths limited [2016] FCA 44
Corones, S.G., Christensen, S.A. and Howell, N., 2016. Submission to Australian Consumer Law
Review Issues Paper.
Dietrich, J.O.A.C.H.I.M., 2015. Liability arising from contract and under the australian
consumer law.
Hunt, K.M., 2015. Gaming the system: Fake online reviews v. consumer law. Computer Law &
Security Review, 31(1), pp.3-25.
Jones, M., 2015. Criminal procedure in Australia [Book Review]. Ethos: Official Publication of
the Law Society of the Australian Capital Territory, (236), p.42.
Reporter, N.L., 2014. IIb. Law Review, Legal Journal, and Legal Resource Articles and
Documents.
Universal Music Australia Pty Ltd v Australian Competition & Consumer Commission (2003)
131 FCR 529