Tuesday, November 17, 2015

Express Freight Companies Proved Correct After Antitrust Probe into Air Cargo Cartel

Millions in Fines for Those Guilty of Fuel Fiddle
Shipping News Feature
INDIA – The Competition Commission of India (CCI) has imposed fines totalling around $38 million on three airlines for their part in an air cargo price-fixing cartel relating to fuel surcharges. The CCI opened the antitrust investigation against several airlines in 2013 after receiving a complaint from the Express Industry Council of India, representatives of express courier and freight companies.

The Express Industry Council of India under argued that activities undertaken by Jet Airways, InterGlobe Aviation, Spice Jet, Air India, and Go Airlines (India) were in contravention of provisions of the country's Competition Act 2002 which deals with anti-competitive agreements. No penalty, however, was imposed upon Air India as its conduct was not found to be in line with the other Airlines, though the company is embroiled currently in a larger antitrust suit in the US. Similarly, no penalty was imposed upon Go Airlines as it apparently gave its cargo belly space to third party vendors with no control on any part of commercial/economic aspects of cargo operations carried out by vendors including imposition of the surcharge.

Accordingly, penalties were levied against Jet Airways of Rs. 151.69 crores ($23 million), InterGlobe Aviation of Rs. 63.74 crores ($9 million), and Spice Jet of Rs. 42.48 crores ($6 million) for their cartel activities, along with cease and desist orders which were also issued against the Airlines.

While imposing penalties, the Commission noted that such conduct in the air cargo industry undermines economic development of the country and ultimately acts to the detriment of end-consumers. However, considering the precarious financial position of Airlines, the penalty was imposed by the Commission at a level of 1% of their average turnover in the last three financial years.