Tuesday, May 3, 2011

Air Freight Cargo Conspirators Face Million Dollar Charges

Anti Trust Cases Rumble On
Shipping News Feature

US – Whilst much of the English speaking world enjoyed an extended Easter break and sat back to watch the Royal Wedding the air cargo cartel scandal proceeded regardless as two former Air France executives were indicted by a Chicago grand jury. The ongoing anti trust matter is just one of several similar cases against airlines and freight forwarders which we have reported on regularly.

Last week in the U.S. District Court in Chicago Marc Boudier, former executive vice president of the cargo division of Air France, and Jean Charles Foucault, former vice president of the cargo division of sales and marketing of Air France faced indictment for conspiring with other air cargo carriers and their officials to suppress and restrain competition for international air cargo services.

The Department of Justice (DoJ) said that Boudier and Foucault carried out a conspiracy by fixing and coordinating rates on air cargo shipments to certain U.S. locations and elsewhere and surcharges on air cargo shipments to and from the United States and elsewhere, and refusing to pay their customers commissions on surcharges for air cargo shipments to and from the United States and elsewhere. According to the indictment, Boudier and Foucault participated in the conspiracy from at least as early as August 2004 until at least February 2006. Air France Cargo joined with KLM cargo to form the largest ‘non-integrator’ freight operator as early as 2005, one imagines the Netherlands based carrier will be a little disconcerted at this latest news.

According to the indictment, Boudier, Foucault and co-conspirators carried out the conspiracy by participating in or directing the participation of subordinate employees in meetings, conversations and communications to discuss rates for air cargo shipments. Subsequently the pair, and their associates, issued announcements of increases on surcharges and rates as agreed during the conspiratorial meetings.

Boudier and Foucault are charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

A total of 21 airlines and 21 executives, including Boudier and Foucault, have been charged in the Justice Department’s ongoing investigation into price fixing in the air transportation industry. To date, more than $1.8 billion in criminal fines have been imposed and four executives have been sentenced to serve prison time. Charges are pending against the remaining 17 executives, including Boudier and Foucault.

Today’s charge is the result of a large joint investigation into the air transportation industry being conducted by the DoJ’s Antitrust Division’s National Criminal Enforcement Section and Cleveland Field Office, the FBI’s Atlanta and Washington Field Offices, the Department of Transportation’s Office of Inspector General and the U.S. Postal Service’s Office of Inspector General.