Mark Pestronk
Q: The relationships between agencies and cruise lines are full of what I would call abusive practices by the lines. Among the worst abuses are not paying any commission on parts of the fare, refusing to pay commission on the sales of shore excursions and refusing to allow agencies to keep the commission when a sailing is canceled. However, I think their worst practice is to provide cut-rate fares and better terms only to their more favored agencies that the rest of us cannot get. Typically, those agencies are either in Florida, have major internet presence or both. Aren't such discriminatory practices illegal? What if such practices favored one age group over another?
A: The practices that you described are legal. Under the antitrust laws and any other competition-related laws that I know of, a cruise line is perfectly free to treat agencies in the ways you describe.
The general rule is that a service provider, such as a cruise line, is free to choose which distributors get the most favorable pricing or sales terms. Suppliers are also generally free to set different commission or override levels for different sales agents.
As you probably recall from my column last week, the cruise lines uniformly hold that a travel agency is actually not an agent of the line. However, it does not matter whether you are an agent of the line or just a middleman or distributor. The law is the same in all cases.
Also, under the law, it does not matter that the long-term effect of these practices is to force your agency out of business. The antitrust laws protect consumers, not competitors.
Finally, assuming that these practices favored senior citizens over younger people, they would still be legal. It is only illegal to discriminate against older people, not in favor of them.
The exception to all these general rules is collusion. If two or more cruise lines were to agree to lower prices or raise commissions for certain favored agencies, such an agreement would be price-fixing under the antitrust laws.
Of course, the typical price-fixing agreement raises prices, not lowers them. However, every price-fixing agreement is illegal, even if the effect on consumers is beneficial.
In the cruise industry, you face an exception to the exception. Lines that are owned and controlled by a common parent company are all considered just one party. So if Holland America and Princess agreed to adopt the same practices at the same time, there would be no illegality under the antitrust laws.
If you can prove that any of the abuses were the result of an agreement among two or more separately owned cruise lines, you could sue or you could try to get the Justice Department to investigate or file suit.
Keep in mind that the courts have made it more difficult to prove price-fixing agreements. If you merely allege the existence of such an agreement and hope that evidence will turn up during the course of the case, the court will dismiss it.
Finally, you need to distinguish an agreement from airline-type matching behavior. If Line A offers an X% discount to Agency X, and Line B does the same as soon as it finds out what happened, there is no agreement under the antitrust laws.