Qantas one of 11 airlines fined $1.1 billion for rigging cargo prices
- UPDATE
- From: AFP
- November 10, 2010 10:07AM
QANTAS is among 11 air cargo carriers fined a total of $1.1 billion by the European Commission for running a freight cartel.
“It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers,” European competition commissioner Joaquin Almunia said today.
Of the 11 airlines,
Qantas received one of the lowest fines - $12.3 million. The airline said it was looking at the judgment.
In 2008, Qantas agreed to pay a fine of $20 million under a deal reached with the Australian Competition and Consumer Commission over the same price-fixing cartel.
ACCC chairman Graeme Samuel said today that from from July 2009, the watchdog had viewed serious cartel conduct as criminal, and could push for jail terms of up to 10 years and fines of $10 million or more.
“You'd have to be a really stupid executive to be involved in cartel activity after July last year,” told ABC TV.
In the European cartel, the Air France-KLM group was hit with the biggest fine, $427.3 million, of which $252.2 million was for Air France and $175 million for KLM.
Air France-KLM said it plans to appeal the fine.
British Airways was fined $143.3 million. The other companies fined were Air Canada, Martinair, Cargolux, Cathay Pacific Airways, Japan Airlines, LAN Chile, SAS and Singapore Airlines.
Lufthansa and its subsidiary Swiss International Air Lines escaped a fine under the commission's leniency program for being the first to provide information about the cartel.
The 11 cargo carriers co-ordinated their action on surcharges for fuel and security without discounts over a six-year period, between December 1999 and February 2006, the European Union's competition watchdog said.
LAN Chile was fined $11.3 million, Scandinavia's SAS group $96.3 million, and Luxembourg's Cargolux $109.7 million.
In Asia, Singapore Airlines was fined $102.7 million, Cathay was hit with $78.4 million, and Japan Airlines will pay $49 million.
Air Canada must pay $28.8 million.
Five airlines applied for a reduction in the fine, claiming they were unable to pay it, but the commission said none of them met the conditions.
The commission said it dropped charges against another 11 carriers and one consultancy firm which it did not name.
The fines, totalling $1.1 billion, were slapped on airlines for co-ordinating a cartel that covered flights from, to and within the European Economic Area.
The cartel initially began with contacts between airlines to ensure that worldwide air freight carriers imposed a “flat rate surcharge per kilo for all shipments,” the commission said.
The co-operation expanded with the introduction of a security surcharge. The companies refused to pay a commission on such surcharges to their clients, the regulator said.
“By refusing to pay a commission, the airlines ensured that surcharges did not become subject to competition through the granting of discounts to customers,” the commission said.
SAS also said it would appeal the fine.
“We adamantly maintain that these isolated incidents do not mean that SAS Cargo has been involved in a global cartel,” the airline's chief legal officer, Mats Loennkvist, said in a statement.
“We are highly disappointed and strongly contest the considerable level of the fines, which we believe to be disproportionate to SAS Cargo's actions.”