European air cargo transporters fined for role in price-fixing cartel

Dive Brief:

  • European airfreight carriers found guilty of price-fixing are to have previously annulled fines reinstated by the European Commission (EC), The Loadstar reported last week. A total of €776m ($833m) will be owed by participants in the cartel, including Air France, British Airways, CargoLux, Singapore Airlines, SAS, Cathay Pacific, Japan Airlines, Martinair, and LAN Chile.
  • The price-fixing occurred between 1999 and 2006. Both fuel and security surcharges were fixed, at bi-lateral and multi-lateral levels. Ten of the 11 accused challenged the 2010 decision, leading to the initial annulment based on procedural grounds. 
  • The EU commission on competition cited both importers and exporters dependence (at 20% and 30%, respectively) on air cargo transport, and applauded the re-imposed punitive sanctions brought after years of legal battles.

Dive Insight:

The determination of the EC to punish participants in the seven year legal battle could be influenced by past examples of the same action, such as a second case involving British Airways, who were found to be in collusion with Virgin Atlantic. British Airways was fined $300 million by the U.S. Department of Justice.

Price fixing is of consistent concern to shippers of every type, including those utilizing transport ships. As various lines seek consolidation in an effort to rid an overburdened market of excess vessels, various shipping groups have levied allegations of potential intent to fix prices. The Federal Maritime Commission has dismissed such charges as recently as November, 2016.

Price fixing, a form of anti-competitive behavior, is a serious violation of antitrust law as well as damaging to markets. The DOJ recommends watching closely for uniformity of price changes amongst competitors. It's a practice that defeats the industry, rather than sustains it, and could lead to boycotts.       

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Filed Under: Freight
Top image credit: Adrian Pingstone