Friday, February 21, 2014

Two More Cargo Carriers Fined After Colluding on Air Freight Contract

Both Companies Seem to Have Serious Problems
Shipping News Feature

BRAZIL – Earlier this week, Brazil’s competition authority the Administrative Council of Economic Defence (Cade) fined two air freight carriers and two unnamed representatives of the airlines, a combined total of R$83 million for their roles in a bid-rigging cartel. Skymaster Airlines has been fined R$35 million whilst the Brazilian Express Transportes Aéreos (Beta Cargo) will have to pay R$47 million.

The two companies colluded to fix bid prices in order to hamper competition on air cargo service tenders set by the state owned postal carrier Brazilian Post and Telegraph (ECT) in 2000 and 2001. During Cade’s investigation, it was found that four days prior to submitting bids in the ECT competition held in 2000, the representatives of companies signed ‘Statement of Commitment Subcontracting’ through which they agreed to divide the provision of services if one of them were to win the bid.

Though a legitimate and recognised practise, this type of partnership is only legal when agreed upon after the tendering process. The collusion prior to the bidding demonstrates the existence of commercial information sharing with the aim of interfering in the outcome of the bidding, thereby harming free competition.

Despite the decision to punish the two carriers collecting the fines might be a little tricky. Beta Cargo, formerly based at Guarulhos International Airport, São Paulo, lost its air carriers licence in July 2012 and Skymaster, headquartered at both Eduardo Gomes International Airport in Manaus with services also from Guarulhos, whilst still apparently trading, has currently had its website hacked and made unworkable, presumably by some disenchanted supplier.

Photo: Sitting side by side in a corner of Eduardo Gomes jets from both companies lie, apparently abandoned.