Airlines penalised for cargo cartel

11 November 2010

11 November 2010 | Angeline Albert   

Eleven airlines have been fined a combined total of more than €799 million (£685.6 million) by the European Commission (EC) for operating a worldwide cartel for cargo services.

British Airways, AirCanada, Air France-KLM, Cathay Pacific, Cargolux, Japan Airlines, Qantas, LANChile, Martinair, SAS and Singapore Airlines were the cargo operators fined for fixing surcharges for fuel and security without discounts for six years.

Lufthansa and its subsidiary Swiss International Air received immunity from the fines under the EC’s leniency programme because it was the first to provide information about the cartel.

Cartel members fixed prices from December 1999 to 14 February 2006. Communication on prices between the airlines began on the basis of discussing fuel surcharges, the EC said. The carriers contacted each other to ensure that worldwide airfreight carriers imposed a flat rate surcharge per kilo for all shipments. Cartel members then continued colluding to introduce a security surcharge and refused to pay a commission on surcharges to their clients (freight forwarders). The cartel ensured all the carriers introduced the surcharges and that increases were applied in full without exception, the EC found.

“It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers,” said vice-president for competition Joaquín Almunia.

In separate statements, British Airways, Cathay Pacific, Cargolux and LAN Chile said they are evaluating their legal options, including whether or not to appeal the decision. British Airways added: “The fine is €104 million (£88.6 million) and falls within the provision made by the company in its 2006-7 report and accounts.”

SAS, Air France-KLM (which owns Martinair) and Singapore Airlines Cargo (SIA Cargo) all intend to appeal. The latter said in a statement that it “strongly contests any suggestion that it has been involved in a global conspiracy to fix surcharges or rates”.

It added: “Singapore Airlines Cargo further contests any suggestion that the European Commission can apply EU law to conduct in markets outside the EU that was lawful in those countries and did not have direct or substantial effects in the EU.”

Qantas, Air Canada and Japan Airlines have yet to publish statements.    

Separate probes conducted by the US Department of Justice and the Australian government have been completed. In the US, total fines of more than $US1.5 billion (£0.93 million) were levied against airlines that acknowledged fixing fuel surcharges, and 18 airlines have been charged. Investigations by other nations are ongoing.

The individual fines by the European Commission are:

£50-60k+ benefits
Beaumont Select
GBP55000 - GBP65000 per annum +
Bramwith Consulting
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