Thursday, December 3, 2015

Air Freight Cartel Just Keeps Costing Antitrust Transgressors More Money

Canadian Court Clouts Carrier Company Cathay - Again
Shipping News Feature
CANADA – US – Cathay Pacific has entered into a settlement agreement after being charged in the Canadian civil cargo antitrust class actions which has seen several air freight carriers facing cartel accusations. Under the Settlement Agreement, which is subject to approval by the Canadian courts, Cathay Pacific has agreed to make a payment of CA$6 million to settle the litigation without admitting to any unlawful conduct, wrongdoing or liability. This reflects the behaviour of numerous carriers and freight forwarders seen in similar cases around the world in the past few years.

Cathay Pacific has been embroiled in several antitrust suits of late costing the company millions in compensation and fines. Two years ago, the Hong Kong based company was fined CA$1.5 million for its involvement in a conspiracy to fix the prices of certain surcharges imposed on international air freight movements to and from Canada between 1999 and 2003. At that time, Cathay entered a guilty plea (and our coverage took the publishers ‘Headline of the Year Award’).

Since then one New York prosecution alone has seen Cathay fork out US$65 million, one of four defendants punished with over US$360 million in fines, since when a who’s who list of defendants, have been hit for an astounding US$1.5 billion in overall costs in a continuing series of cases.

Looking to this particular ongoing cartel class action case, the US Court of Appeals for the Second Circuit recently sided with plaintiffs in declining to hear an interlocutory appeal of the order granting them certification of a class of direct purchasers of air cargo shipping services. Calling an immediate appeal ‘unwarranted’, the Court’s order removed the final obstacle that stood between the plaintiffs and the trial of their claims.

The trial will begin in April 2016 against Air China, Air India, Air New Zealand, and US air cargo carrier Polar Air Cargo and its parent, Atlas Air Worldwide Holdings. The plaintiffs are seeking billions in damages for the airlines’ illegal price-fixing of air cargo shipping services. The District Court has observed that ‘plaintiffs have submitted a trove of direct and circumstantial evidence that strongly suggests the existence of an agreement among the defendants to fix prices’, amounting to ‘compelling common evidence of a global conspiracy’.

If the plaintiffs prevail at trial, they will be entitled to trebled damages under the Sherman Act whilst the six law firms representing the plaintiffs have already been granted US$90,000 in interim incentive awards by the Court. Many of the original airline defendants have settled with the plaintiffs for a total of more than US$1 billion across twenty-seven settlements. Hausfeld Partner Brent Landau, who played a lead role in the briefing and argument of class certification commented:

“We are pleased to have passed this milestone in seeking compensation for the victims of this massive price-fixing conspiracy. We look forward to bringing the remaining cartelists to trial to obtain the compensation the class members deserve under the antitrust laws.”

The US case is In re Air Cargo Shipping Services Antitrust Litigation, Case No. 06-MD-1175 (JG) (VVP).