July 28, 2017

Air New Zealand and Garuda Indonesia have both been fined for their role in a price-fixing cartel for air cargo shipments in Australia.

In a further win for the Australian Competition and Consumer Commission in its long-running air cargo cartel investigation, the airlines were found to have illegally fixed surcharges on fuel and security.

This was so even though their conduct that took place and contracts were entered into outside the country was legal in those places. The ACCC’s complaint was that the effect of those arrangements illegally affected competition for Australian uses of the services.

Since 2009, the ACCC has sued 15 international airlines for price-fixing regarding surcharges on air cargo sent to Australia. Most major international carriers including Qantas have been targeted for their conduct.

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Penalties imposed on the other 13 airlines range from $5 million to $20 million.

The High Court of Australia has ruled in the latest case – that by making a joint application for approval of the surcharges to the Hong Kong aviation regulator – the airlines were found to have affected freight prices on routes from Hong Kong, Singapore and Indonesia to and from Australian ports.

The HK joint approval had the effect of them imposing the same freight levies and therefore, according to the High Court of Australia, substantially lessening competition in the air cargo market.

To the extent the airlines marketed to and negotiated their services with freight forwarders in Australia and competed with other airlines for business, their actions had a substantial effect on competition in Australia and was therefore illegal.

The ACCC has so far recovered nearly $100 million from the other 13 members of the air cargo cartel.

In June, the European Commission fined 11 airlines for their role for collusion on flights to and within Europe to fix the price of new security measures in the aftermath of 9/11 terror attacks in the US. Qantas had already paid its shares of the €799m fines its “competitors” contested over a procedural error in the original determination. British Airways was fined €104m, Air France €183m and KLM €127m. Other airlines fined include Air Canada, Cathay Pacific Airways, Japan Airlines, LAN Chile, and Singapore Airlines. Lufthansa and Swiss Air were initially considered to be part of the cartel but gained immunity after cooperating with authorities.

Air New Zealand Ltd  v. Australian Competition and Consumer Commission [2017] HCA 21, Kiefel CJ, Bell, Keane, Nettle, Gordon JJ, 14 June 201

Categories: Litigation & Law Practice , Aviation Law

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