Wednesday, February 12, 2014

Another Air Freight Carrier Hit by Huge Cash Penalty for Cargo Antitrust Collusion

Class Action Suits Claim One More Scalp as Hong Kong Flag Outfit Rolls Over
Shipping News Feature

US – The air freight arm of Cathay Pacific has entered into a settlement agreement in the multidistrict class actions against cargo carriers underway in New York. In order to avoid the ongoing litigation underway in the Big Apple, Cathay Pacific has agreed to make a payment of US$65 million to settle without admitting any wrongdoing or liability, a move seen just last month when two other defendants, Korean Air and Singapore Airlines, entered into similar agreements with freight purchasers to pay a total of $207 million in reparation, but made no admission to any wrongdoing or liability.

If approved by the court, the plaintiffs would have entered into settlements with 20 defendant groups totalling more than $750 million. These settlements are for significant percentages of defendants' relevant sales of air cargo shipping services to and from the US. Cathay Pacific made sufficient provisions in 2013 to cover the costs of the settlement going forward.

In 2008, Cathay Pacific entered into a plea agreement with the United States Department of Justice under which the Company agreed to plead guilty to a one-count violation of the United States Sherman Act relating to its air cargo business and paid a fine of US$60 million. This brought to an end the United States criminal antitrust proceedings against the Company in respect of its cargo operations. Anyone who wishes to read the gory details of the whole sordid affair can use this link to the multidistrict litigation 1:06-md-01775 where there have been 42 Court reports (so far….)