Four airlines fined for cargo price-fixing
Four airlines, including Air France-KLM and Hong Kong-based Cathay Pacific, are to pay fines in the US totalling $504m for their roles in a criminal conspiracy to fix surcharges on air cargo shipments.
Investigators from around the world, including the US, the European Union and Australia, have uncovered a global conspiracy in the air freight industry in one of the world’s biggest cartel probes.
About 30 airlines are under investigation and criminal prosecutions of individuals are also under way.
To date, including Thursday’s moves, the US Department of Justice has imposed fines of more than $1.2bn as a result of its probe into the aviation industry, the highest fines yet imposed in a criminal antitrust investigation.
The US Justice Department said on Thursday that four groups had agreed to plead guilty: Air France-KLM, the world’s largest airline measured by turnover; Cathay Pacific, the de facto Hong Kong flag carrier; SAS Scandinavian Airlines; and Martinair, a 50/50 joint venture owned by KLM and Maersk, the Danish shipping concern.
Under the terms of the plea agreements, which still require court approval, Air France-KLM will pay $350m, the second largest criminal fine yet obtained by the DoJ’s antitrust division, Cathay Pacific $60m, SAS $52m and Martinair $42m.
Last year, British Airways and Korean Air were each fined $300m by the US Justice Department for their roles in separate price-fixing conspiracies in both their cargo and passenger operations. Australia’s Qantas and Japan Airlines have been fined $61m and $110m respectively.
Separately, British Airways was fined £121.5m last year by the Office of Fair Trading for colluding with Virgin Atlantic in fixing fuel surcharges on long-haul passenger fares to and from the UK. Virgin was granted leniency by being the first to reveal the conspiracy.
In the first prosecution of an individual arising from the US cargo investigation, Bruce McCaffrey, former Qantas vice-president of freight for the Americas, was last month jailed for eight months and fined $20,000.
Lufthansa, the German flag carrier, escaped a heavy fine by being the first airline in the cargo probe to volunteer information to the cartel authorities in the three-year investigation. It was granted leniency by both the US Justice Department and the European Commission.
According to information filed to the court by the Justice department, Air France and KLM, which operated separately before merging in 2004, conspired with other airlines to suppress and eliminate competition by fixing the cargo rates charged to customers for international air shipments from and to the US from January 2000 to at least February 2006.
“This price-fixing conspiracy undermines our economy and harms the American people who, due to lack of true competition in this area, end up footing the bill,” said Kevin O’Connor, US associate attorney-general.
Airlines face further heavy fines from cartel authorities elsewhere in the world.
Copyright The Financial Times Limited 2008
CIAO
_goa
Four airlines, including Air France-KLM and Hong Kong-based Cathay Pacific, are to pay fines in the US totalling $504m for their roles in a criminal conspiracy to fix surcharges on air cargo shipments.
Investigators from around the world, including the US, the European Union and Australia, have uncovered a global conspiracy in the air freight industry in one of the world’s biggest cartel probes.
About 30 airlines are under investigation and criminal prosecutions of individuals are also under way.
To date, including Thursday’s moves, the US Department of Justice has imposed fines of more than $1.2bn as a result of its probe into the aviation industry, the highest fines yet imposed in a criminal antitrust investigation.
The US Justice Department said on Thursday that four groups had agreed to plead guilty: Air France-KLM, the world’s largest airline measured by turnover; Cathay Pacific, the de facto Hong Kong flag carrier; SAS Scandinavian Airlines; and Martinair, a 50/50 joint venture owned by KLM and Maersk, the Danish shipping concern.
Under the terms of the plea agreements, which still require court approval, Air France-KLM will pay $350m, the second largest criminal fine yet obtained by the DoJ’s antitrust division, Cathay Pacific $60m, SAS $52m and Martinair $42m.
Last year, British Airways and Korean Air were each fined $300m by the US Justice Department for their roles in separate price-fixing conspiracies in both their cargo and passenger operations. Australia’s Qantas and Japan Airlines have been fined $61m and $110m respectively.
Separately, British Airways was fined £121.5m last year by the Office of Fair Trading for colluding with Virgin Atlantic in fixing fuel surcharges on long-haul passenger fares to and from the UK. Virgin was granted leniency by being the first to reveal the conspiracy.
In the first prosecution of an individual arising from the US cargo investigation, Bruce McCaffrey, former Qantas vice-president of freight for the Americas, was last month jailed for eight months and fined $20,000.
Lufthansa, the German flag carrier, escaped a heavy fine by being the first airline in the cargo probe to volunteer information to the cartel authorities in the three-year investigation. It was granted leniency by both the US Justice Department and the European Commission.
According to information filed to the court by the Justice department, Air France and KLM, which operated separately before merging in 2004, conspired with other airlines to suppress and eliminate competition by fixing the cargo rates charged to customers for international air shipments from and to the US from January 2000 to at least February 2006.
“This price-fixing conspiracy undermines our economy and harms the American people who, due to lack of true competition in this area, end up footing the bill,” said Kevin O’Connor, US associate attorney-general.
Airlines face further heavy fines from cartel authorities elsewhere in the world.
Copyright The Financial Times Limited 2008
CIAO
_goa
