EC fines 11 air cargo carriers $1.1 billion for price fixing

The European regulator yesterday fined 11 airlines a total of $1.1 billion (€799 million) for operating a worldwide cartel which affected cargo services within the European Economic Area (EEA).

The EC alleged that the 11 air cargo carriers including British Airways, Singapore Airlines, Air France and others coordinated various elements of price for a period of over six years, from December 1999 to 14 February 2006.

In a statement the EC said that the cartel arrangements consisted of numerous contacts between airlines, at both bilateral and multilateral level, covering flights from, to and within the EEA.

Airlines providing airfreight services primarily offer the transport of cargo to freight forwarders, who arrange the carriage of these goods including associated services and formalities on behalf of shippers.

The EC alleges that contacts on prices between the airlines concerned initially started with a view to discuss fuel surcharges. The carriers contacted each other so as to ensure that worldwide airfreight 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 their clients (freight forwarders).

The aim of these contacts, according to the EC 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, said the EC.

Air France received the largest fine at €182.9 million, followed by KLM, while Lufthansa and its subsidiary Swiss International Air Lines received full immunity from fines under the EC's leniency program, as it broke ranks from the cartel and blew the whistle.

The EC said that allegations of collusion on two other surcharges and regarding freight rates have been dropped from the case for insufficient evidence and it also dropped charges against another 11 carriers and one consultancy firm for the same reason.

The individual fines are as follows:
	Air cargo carriers	Fine (€)*
1.	Air Canada	21 037 500
2.	Air France	182 920 000
	KLM	127 160 000
3.	Martinair	29 500 000
4.	British Airways	104 040 000
5.	Cargolux	79 900 000
6.	Cathay Pacific Airways	57 120 000
7.	Japan Airlines	35 700 000
8.	LAN Chile	8 220 000
9.	Qantas	8 880 000
10.	SAS	70 167 500
11.	Singapore Airlines	74 800 000
12.	Lufthansa	0
	Swiss International Air Lines	0
(*) Legal entities within the undertaking may be held jointly and severally liable for the whole or part of the fine imposed.

"It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers," said EC VP-Competition Joaquin Almunia. "With today's decision, the Commission is sending a clear message that it will not tolerate cartel behavior."