Tuesday, April 23, 2013

More Air Freight Carriers Fined for Cargo Cartel Offences

Seemingly Never Ending Series of Cases Against Industry Leaders Continues
Shipping News Feature

NEW ZEALAND – The New Zealand high Court has ordered three further airlines to pay a combined total of NZ$9.6 million in penalties for their role in the air cargo cartel case brought by the Commerce Commission. This brings the total penalties in the case taken out against the freight carriers to over NZ$35 million. The penalty judgments against Cathay Pacific Airways Ltd (NZ$4.3 million), Thai Airways International PLC (NZ$2.7 million), and MASkargo System Berhad Ltd (NZ$2.6 million) were for price fixing in breach of the Commerce Act. The breaches took place at various times between February 2000 and February 2006 and is yet another in a series of anti trust suits against freight forwarders and the air carriers we have seen come to Court in the past few years.

All three airlines were also ordered to pay court costs to the Commission. The penalties were recommended to the Court by the Commerce Commission and each airline as part of pre-trial settlements. Many of the earlier cases are now subject to class actions from companies affected by the falsely inflated rates.

Cathay admitted liability for agreeing with other carriers the amounts to be charged for fuel and security surcharges for cargo flown from India to New Zealand, and did not dispute agreeing fuel and security surcharges for the Singapore to New Zealand cargo route to New Zealand. Thai admitted liability for agreeing fuel and security surcharges in Indonesia and Malaysia for cargo flown to New Zealand. MASkargo admitted liability for agreeing fuel and security surcharges in Indonesia and Switzerland for cargo flown to New Zealand. Commerce Commission Chair Dr Mark Berry said:

"The Commission is pleased to have settled with a further three airlines in this significant case. The penalties are a reminder to both New Zealand and overseas-based companies that colluding on prices is illegal and may result in substantial penalties under the Commerce Act. The Commission is committed to pursuing cartels that affect New Zealand markets.”

Cathay and Thai were among the 13 airlines the Commission filed proceedings against in December 2008, alleging that the airlines colluded to impose fuel and security surcharges for air cargo shipments to and from New Zealand. The Commission also then filed proceedings against Malaysian Airline System Berhad (Malaysian Airlines, the parent company of MASkargo System Berhad). As part of the settlement it was agreed that MASkargo would be added as a defendant to the proceeding and the proceeding would be discontinued against Malaysian Airlines.

The Commission has previously received penalties against seven other airlines: British Airways PLC (NZ$1.6 million in 2011), Cargolux Airlines International (NZ$4.6 million in 2011), Emirates (NZ$1.5 million in 2012), Japan Airlines International Co. Limited (NZ$2.275 million in 2012), Korean Air Lines Co. Limited (NZ$3.5 million in 2012), Qantas Airways Limited (NZ$6.5 million in 2011), and Singapore Airlines Cargo (NZ$4.1 million in 2012). The penalties against 4 of the air cargo carriers received a discount in recognition for early admissions. Korean Air (33%), Emirates (25%), Singapore Airlines Cargo (20%) and Japan Airlines (35%)