Air Freight Cartel Members Found Guilty After Eight Years of Indecision

AUSTRALIA – Yet another cartel scandal in the world of air freight has been concluded after the High Court of Australia ruled in favour of a decision by the Australian Competition and Consumer Commission (ACCC) which found that price fixing agreements entered into between Air New Zealand, PT Garuda Indonesia, and other international airlines, between 2002 and 2006, breached Australia's competition law. After being cleared of all charges in October 2014 it would seem this time there is little chance for the two air cargo carriers to escape penalties.

The ACCC took action against Air NZ in 2009 and Garuda in 2010 alleging they colluded with other airlines on charges for fuel, security, insurance surcharges, and a customs fee, for the carriage of air freight from origin ports in Hong Kong (both airlines), Singapore (Air NZ) and Indonesia (Garuda) to destination ports in Australia. Under the law as it then stood, the ACCC was required to establish that the conduct occurred in a ‘market in Australia’.

The High Court unanimously dismissed the appeals by each airline and held that all aspects of the market, including the presence of customers in Australia, need to be considered in deciding whether a market is ‘in Australia’, a view undoubtedly not shared by the two, now guilty, parties. ACCC Commissioner Sarah Court, said:

“This is a significant win for the ACCC in the long-running, highly contested air cargo cartel proceedings. How a market is defined, including considerations of whether conduct occurs in Australia, are critical issues to the understanding and interpretation of Australian competition law. [This] judgment sends a clear message that the ACCC is committed to pursuing cartel conduct that impacts on Australian business and consumers.”

The matters against Air NZ and Garuda will be remitted to the Federal Court for a hearing as to relief, including penalty. Between 2008 and 2010, the ACCC took proceedings against 15 international airlines. 13 airlines settled, with Federal Court judges imposing penalties totalling $98.5 million, as follows:

 

Carrier	Date of Court Order	Penalty (A$)
Qantas	Dec 2008	$20 million
British Airways	Dec 2008	$5 million
Air France & KLM	Feb 2009	$6 million
Cargolux	Feb 2009	$5 million
Martinair	Feb 2009	$5 million
Japan Airlines	April 2011	$5.5 million
Korean Air Lines	Nov 2011	$5.5 million
Malaysian	May 2012	$6 million
Emirates	Oct 2012	$10 million
Cathay Pacific	Dec 2012	$11.25 million
Singapore	Dec 2012	$11.25 million
Thai Airways	Dec 2012	$7.5 million
	Total	$98.5 million