Wednesday, June 27, 2018

Yet More Pain for Air Cargo Cartel Participants as Latest Penalties Levied

Antitrust Woes Continue for Conspiring Airfreight Carriers
Shipping News Feature
AUSTRALIA – The Federal Court of Australia has ordered Air New Zealand to pay $15 million in penalties after legal action by the Australian Competition and Consumer Commission (ACCC), accusing the airline of taking part in a global air cargo cartel. The Court found Air NZ conspired with other airlines to fix the price of fuel and insurance surcharges on air freight services from Hong Kong, and insurance and security charges from Singapore, to various locations, including Australian airports, between 2002 and 2007.

The Court ordered Air NZ to pay a pecuniary penalty of A$11.5 million for price fixing in relation to fuel surcharges imposed for cargo from Hong Kong to Australia. An additional A$3.5 million penalty is payable for price fixing in relation to the insurance and security surcharge from Singapore to Australia.

Since the ACCC first launched its investigation into the air cargo cartel in 2006, penalties totalling A$113.5 million have been imposed against 14 airlines. ACCC Commissioner Sarah Court commented:

“These illegal price fixing agreements unfairly reduced competition for the transport cost for goods flown into Australia. This decision sends a strong warning to overseas and domestic operators that the ACCC can and will continue to defend competition and the rights of Australian customers and businesses by taking action against anti-competitive conduct. Our efforts over the last decade and these significant penalties make clear the ACCC’s commitment to tackling cartels.”

Air NZ has also agreed to pay A$2 million towards the ACCC’s legal costs.

Competition regulators around the world have taken action in relation to the air cargo cartel, with fines or penalties ordered against various airlines in Europe, the United States, Korea, New Zealand, Canada, and India. The ACCC began legal action against 15 international airlines between 2008 and 2010 under the Trade Practices Act (1974) for conduct which occurred between 2002 and 2006.

In October 2014 the Federal Court initially dismissed the ACCC’s case against Air NZ and the 15th airline, PT Garuda Indonesia. The ACCC appealed the decision to the Full Court of the Federal Court, which upheld the ACCC’s appeal in March 2016. Air NZ and Garuda appealed the decision to the High Court, which last year unanimously dismissed the appeals.

The penalty hearing against Garuda was heard before Justice Perram this week. Judgment in that matter has been reserved. So far the Federal Court has imposed penalties totalling A$113.5 million in relation to 14 airlines involved in the air cargo cartel, as follows:

Carrier Date of Court Order Penalty (A$)
Qantas Dec 2008 $20 million
British Airways Dec 2008 $5 million
Air France & KLM Feb 2009 $6 million
Cargolux Feb 2009 $5 million
Martinair Feb 2009 $5 million
Japan Airlines April 2011 $5.5 million
Korean Air Lines Nov 2011 $5.5 million
Malaysian May 2012 $6 million
Emirates Oct 2012 $10 million
Cathay Pacific  Dec 2012 $11.25 million
Singapore  Dec 2012 $11.75 million
 Thai Airways Dec 2012 $7.5 million
Air NZ June 2018 $15 million
  Total $113.5 million