THOMSON has forced a Government U-turn following a Court of Appeal landmark ruling on discounting policies, racking agreements and joint promotions with agents.
The court ruled in favour of the market leader by declaring the Department of Trade and Industry acted outside its powers by banning certain price-cutting policies, racking arrangements and joint marketing with agents.
It followed the 1997 Monopolies and Mergers Commission investigation into the travel industry.
Thomson argued that the order went far beyond its aim of banning the ‘most favoured customer clause’ – where an operator prevents an agent from offering higher discounts for another company.
A Thomson spokeswoman said: “We had no problem with this clause because it was a recommendation of the MMC. But the order outlawed many legitimate practises to which the commission had not objected. Operators were unsure what they could legitimately agree with travel agents. It’s a victory for the whole industry.”
The ruling is the first time a judicial review has been successful in competition law.
The DTI, which is not allowed to appeal, will now redraft the order.