Saturday, August 31, 2013

Yet More Air Freight Corruption Costs a Packet as Cargo Airlines Fined (Again)

Company Crashed as South America Joins in Punishment Campaign Against Conspirators
Shipping News Feature

BRAZIL – Earlier this week, Brazil’s competition authority the Administative Council of Economic Defence (Cade) fined four airlines, ABSA Cargo Airlines, Varig Logística, American Airlines and Alitalia and seven individuals a total of more than R$293 million, for their part in an air cargo price fixing cartel relating to additional fuel surcharges on international air freight shipments. The collusion took place between 2003 and 2005 and, according to Cade, the participating companies came to control about 60% of the market in Brazil during this period and the prosecution has caused one company to go under.

The air cargo cartel investigation began in 2006 from a leniency agreement between Cade and Deutsche Lufthansa AG airlines; two of its subsidiaries, Lufthansa Cargo AG and Swiss International Airlines; and unnamed five individuals who, presumably worked or still work for the group. United Airlines and employee Luiz Fernando Costa were also initially embroiled in the investigation but were later acquitted due to lack of evidence.

The penalty judgements for each of the employees, Marcelo Del Padre, AA Cargo; Margareth de Almeida Faria, Varig Logística; José Roberto de Costa, Varig Logística; Norberto Maria Jochmann, Hernán Arturo Merino Figueroa, and Javier Felipe Meyer de Pablo, ABSA; and Dener José de Souza, AA Cargo, is dependent on their position within the company, but reports suggest that the fine could range from R$74,000 to R$2.3 million.

ABSA, a subsidiary of LATAM airlines, which was also fined last week for its part in an ongoing air cargo antitrust case by the Canadian authorities, has apparently been ordered to pay R$114 million. Since the start of Brazil’s investigation, Varig Logística, operating as VariLog, suspended its operations and later declared bankruptcy. According to local reports, Cade imposed the largest fine on Varig Logística, penalising the company R$145 million, whilst American Airlines were ordered to pay R$26 million and Alitalia R$4 million.

In February, the airlines Société Air France and KLM and two employees, Paulo Jofily de Monteiro Lima and Renata de Souza Branco, respectively, confessed to participating in the collusion and agreed to cease the practice and pay about R$14 million in financial assistance.