EC fines 11 cargo airlines $1.1 billion

EC fines 11 cargo airlines $1.1 billion    The European Commission said Tuesday it has fined 11 air cargo carriers a total of 799.4 million euros ($1.1 billion) for operating a worldwide price-fixing cartel that affected cargo services within the European Economic area.
   The EC said in a release the carriers coordinated their action on surcharges for fuel and security without discounts over a six-year period. Lufthansa (and its subsidiary Swiss International Air Lines) received full immunity from fines under the commission’s leniency program, as it was the first to provide information about the cartel.
   “It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers” said Joaqu'n Almunia, EC vice president for competition. “With today’s decision the commission is sending a clear message that it will not tolerate cartel behavior.”
   The airlines involved, and the approximate fines they received, are:
   ' Air France, 183 million euros ($254 million).
   ' KLM, 127 million euros ($176 million).
   ' British Airways, 104 million euros ($144 million).
   ' Cargolux, 79.9 million euros ($111 million).
   ' Singapore Airlines, 74.8 million euros ($104 million).
   ' SAS 70.2 million euros ($97 million).
   ' Cathay Pacific Airways, 57.1 million euros ($79 million).
   ' Japan Airlines, 35.7 million euros ($50 million).
   ' Martinair, 29.5 million euros ($41 million).
   ' Air Canada, 21 million euros ($29 million).
   ' Qantas, 8.9 million euros ($12 million).
   ' LAN Chile, 8.2 million euros ($11 million).
   The EC said the cartel members coordinated various elements of price from December 1999 to February 2006.
   The EC said contacts on prices among the airlines concerned initially started with a view to discuss fuel surcharges. The carriers contacted each other so as to ensure that worldwide air freight carriers imposed a flat rate surcharge per kilo for all shipments. The cartel members extended their cooperation by introducing a security surcharge and refusing to pay a commission on surcharges to freight forwarders.
   It said the aim of the contacts was to ensure that these surcharges were introduced by all the carriers involved and that increases (or decreases) of the surcharge levels were applied in full without exception. By refusing to pay a commission, the airlines ensured that surcharges did not become subject to competition through the granting of discounts to customers. Such practices are in breach of the EU competition rules, the commission said.
   On the other hand, commission allegations of collusion on two other surcharges and regarding freight rates in the Statement of Objections have been dropped from the case for insufficient evidence. The commission also dropped charges against another 11 carriers and one consultancy firm.

van der Jagt

   The European Shippers’ Council welcomed the announcement, saying “the effect of the surcharges illegally agreed and set by some airlines has been to artificially inflate cargo shipment prices to the benefit of those cartel members and to the detriment of the customer which is in clear violation of the EU competition rules.'
   The action “now opens the way for compensation claims to proceed through the courts by those shippers that choose to,' said Nicolette van der Jagt, secretary general of ESC. 'There are hundreds of shippers that have already signed up with various legal firms to pursue such claims on their behalf, and cases have already been filed in the U.K. and Dutch courts. I anticipate many more shippers joining such action as these cases now proceed following the commission's decision.
   'The most important outcome for ESC, however, from this whole affair is that this decision acts as an effective deterrent to anyone considering coordinating their pricing strategies in the future,” she said. ' Chris Dupin