Friday, March 17, 2017

Three Quarter Billion Euro Fine for Air Freight Cartel Reinstated

Eleven Cargo Carriers Each Hit with Huge Penalties as Whistleblower Escapes Sanction (Again)
Shipping News Feature
EUROPE – The European Commission has re-adopted a cartel decision against 11 air cargo carriers and imposed a fine totalling €776,465,000 for operating a price-fixing cartel. The Commission's original decision was annulled two years ago, by the General Court on procedural grounds. At the time, the court found that there was a contradiction between the grounds of the decision and the 'operative part', which in summary translates to the fact that some carriers were found responsible for infringements with which they could have no association as they were not employed on the routes concerned. Commissioner Margrethe Vestager, in charge of competition policy, said:

“Millions of businesses depend on air cargo services, which carry more than 20% of all EU imports and nearly 30% of EU exports. Working together in a cartel rather than competing to offer better services to customers does not fly with the Commission. Today's decision ensures that companies that were part of the air cargo cartel are sanctioned for their behaviour.”

In November 2010, the Commission imposed fines of nearly €800 million on 11 air cargo carriers who participated in a price-fixing cartel, from December 1999 to February 2006, in the airfreight services market covering flights from, to and within the European Economic Area. The cartel arrangements consisted of numerous contacts between airlines, at both bilateral and multilateral level to fix the level of fuel and security surcharges.

The companies fined in 2010 were Air Canada, Air France-KLM, British Airways, Cargolux, Cathay Pacific Airways, Japan Airlines, LAN Chile, Martinair, Qantas, SAS and Singapore Airlines. A 12th cartel member, Lufthansa, and its subsidiary, Swiss International Air Lines, received full immunity from fines.

All but one of the companies - Qantas - subject to the 2010 decision, challenged the decision before the EU's General Court. In December 2015, the General Court annulled the Commission's decision against the 11 cartel participants that appealed, concluding that there had been a procedural error. However, it did not rule on the existence of the cartel.

The Commission maintains that these air cargo carriers participated in a price-fixing cartel and is adopting a new decision and re-establishing the fines. This new decision addresses the procedural error identified by the General Court while remaining identical in terms of the anticompetitive behaviours targeted by the Commission.

The fines were fixed at exactly the same level as in the 2010 Decision for all the companies, except for Martinair. In the 2010 decision, Martinair's fine had been capped at 10% of the company's total turnover in 2009. EU rules allow a maximum fine of 10% of the total turnover in the year preceding the adoption of the decision. Martinair's turnover is significantly lower in 2016 than in 2009. As a result, Martinair's fine has been lowered to reflect this.

In the 2010 decision, Lufthansa, and its subsidiary Swiss International Air Lines, received full immunity under the Commission's 2006 Leniency Notice, as it brought the cartel to the Commission's attention and provided valuable information. Furthermore, the fines for the majority of carriers were also reduced for their cooperation with the Commission under the Leniency Notice.

The individual fines are as follows:


Fine (€)*               

Reduction under the Leniency Notice

Air Canada

21 037 500


Air France

182 920 000



127 160 000



15 400 000


British Airways

104 040 000



79 900 000


Cathay Pacific Airways

57 120 000


Japan Airlines

35 700 000


LAN Chile

8 220 000



70 167 500


Singapore Airlines

74 800 000





Swiss International Air Lines