Thursday, December 18, 2014

Air Freight Cartel Cases Stumble Toward the End Game with Cargo Carriers Possibly Back in the Dock

Competition and Consumer Commission Appeals Against Court Antitrust Decision After Dismissal on Technical Grounds
Shipping News Feature

AUSTRALIA – The Australian Competition and Consumer Commission (ACCC) has not quite finished its antitrust proceedings against air freight carriers, after appealing a decision made by the Australian Federal Court to dismiss the case against Air New Zealand and PT Garuda Indonesia, over allegations that the two cargo carriers colluded with other airlines to fix fuel and security surcharges on air shipments around the world.

In its proceedings, the ACCC alleged that Air New Zealand and Garuda contravened the Trade Practices Act 1974, now called the Competition and Consumer Act 2010, by fixing the level of various surcharges to be applied to air cargo services supplied by a number of airlines between 2001 and 2006. The trial judge concluded that although a number of the price fixing arrangements alleged by the ACCC were established which may have had an effect on prices in Australia, the cartel conduct did not take place in a ‘market in Australia’ in which the airlines were competing, as was required by the Act at the time. The Commission’s Chairman Rod Sims said:

“The ACCC’s appeal is solely focused on the Court’s finding that there was no ‘market in Australia’. Cartel conduct will always be a priority for the ACCC and we seek to take enforcement action in relation to all cartels that harm Australian consumers and businesses. For this reason, it is important that we seek clarity on whether the Act applies to the collusive arrangements identified by the Court. This issue is also important in the context of the Harper Review Panel’s recommendation that cartel provisions should only apply to cartel conduct affecting goods or services supplied or acquired ‘in Australian markets’.”

Air New Zealand and Garuda were the only airlines to defend the allegations through to the trial in May 2013, with the airlines arguing that any agreements were appropriately authorised by the relevant regulators outside the Australian market. In presiding over the case in October earlier this year, Justice Nye Perram concluded that there had been a number of collusive arrangements, but the conduct did not take place in a ‘market in Australia’ as required by the law at the time.