Wednesday, June 15, 2011

New Zealand Court Fines Freight Forwarders

Judgement Follows Last Years American Ruling
Shipping News Feature

NEW ZEALAND – The High Court in Auckland, New Zealand has ordered three international freight forwarding companies to pay penalties totalling NZ$5.2 million plus costs for breaches of the Commerce Act for colluding on ancillary air freight charges connected to security requirements and currency fluctuations.

The penalties on BAX Global (now part of DB Schenker), Schenker AG and Panalpina World Transport follow a New Zealand Commerce Commission investigation which began in 2007 into alleged cartel activities by a number of multi-national companies involved in the supply of international freight forwarding services to the New Zealand market. The investigation was sparked by a confidential application for leniency by one of the company's involved in the conduct.

The companies involved were found guilty of agreeing mutual rates between them for surcharges on the US Air Automated Manifest System (Air AMS), the UK’s New Export System Fee (NES) and China’s 2005 decision to stop pegging the Yuan to the US dollar, causing freight forwarders to arrange a currency adjustment fee (CAF) between them.

BAX has been ordered to pay NZ$1.4 million, Schenker NZ$1.1 million and Panalpina NZ$2.7 million for their roles in the freight forwarding price fixing cartel. These penalties follow on from those already imposed for similar conduct on EGL Inc (now CEVA Logistics) and Geologistics International (now Agility) making for total imposed fines of NZ$8.85 million. A case against Kuehne + Nagel is continuing.

The judgement comes after the same companies admitted to being guilty of cartel activities in the USA last October and agreed to pay fines of over US$50 million between them.

In his judgment, Justice Allan commented that the surcharge agreements were “part of a sustained course of conduct involving covert meetings and communications.” He also noted that the conduct occurred in “a market of fundamental importance to New Zealand.”

Commerce Commission General Manager of Enforcement, Kate Morrison, welcomed the penalties.

“The Court has now ordered a total of $8.85 million in penalties in relation to the freight forwarding surcharge and fee. We are confident the industry has been sent a very strong message that collusion to fix prices is unacceptable. Being so far from our world markets, competitive pricing by the freight forwarding industry is extremely important to the competitiveness of New Zealand industries,” she said.