Thursday, March 8, 2018

Here We Go Again - More Air Freight Carriers Fined Millions for Cartel Activity  

Yet Another Global Antitrust Prosecution

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Shipping News Feature INDIA – The Competition Commission of India (CCI) has imposed penalties upon 3 Airlines for concerted action in fixing and revising fuel surcharge on air freight, breaching the country's Competition Act which prohibits anti-competitive agreements. In its order, the CCI identified a further two airlines believed to have taken part in the cartel, but the commission found the actions of the two carriers not to have been in contravention of the law.

Between 2008 and 2013, Jet Airways, InterGlobe Aviation, Spice Jet, Air India, and Go Airlines were alleged to have acted in a concerted manner in fixing and revising the fuel surcharge rates. According to the CCI, ‘no penalty was imposed upon Air India as its conduct was not found to be parallel with other airlines [and] similarly, no finding of contravention was recorded against Go Airlines as it leased its cargo belly space to third party vendors with no control on any part of commercial/economic aspects of cargo operations done by vendors including imposition of fuel surcharge’.

As a consequence of these decisions penalties of Rs. 39.81 crore (approximately $6 million) was imposed on Jet Airways, Rs. 9.45 crore ($1.4 million) on InterGlobe Aviation, and Rs. 5.10 crore ($750,000) on Spice Jet, and a cease and desist order was also issued against the Airlines.

Considering the financial position of Airlines at the relevant time and noting that fuel surcharge constitutes about 20-30% of cargo revenue, a penalty was imposed by the Commission at 3% of their average relevant turnover of the last three financial years.

The litany of such cases which has plagued the global ocean cargo, freight forwarding, car carrying and airline industries over the last decade can be seen by using the news search box at the head of the page inserting a suitable word or phrase such as cartel, antitrust etc.

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