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Air NZ, PT Garuda Indonesia win Australian cartel case

Friday 31st October 2014

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Air New Zealand and PT Garuda Indonesia have won their bid to dismiss action against them in Australia, claiming the airlines were part of a global cartel to fix prices in international air freight services.

In the Australian Federal Court, Justice Nye Perram dismissed the Australian Competition and Consumer Commission claim against the airlines, which were the only two to defend the action, accepting their defence that the surcharges interfered with competition in markets in Hong Kong, Singapore and Indonesia, but not in Australia.

"Because the commission’s case was limited (in all but one minor case) to flights from airports outside Australia into airports inside Australia I have concluded that no market in Australia was involved," the judgment said. "Prices may well have been affected in Australia by the conduct but that does not mean the market in which the airlines were competing was located here."

The judge said many of the airlines' defences were technical, which he rejected, and were " in the main, of little merit and occupied much of a trial which spanned over six months."

The alleged price-fixing has been the subject of antitrust process worldwide, with big settlements from multi-national airlines in Europe and the US. Some of the alleged agreements appear to have been in place since 2001.

The judge said the commission didn't demonstrate Air New Zealand was involved in collusive practices over fuel surcharges calculated with reference to cargo weight in Singapore. However the judge found the company did engage in fixing prices on an insurance and security surcharge put in place in response to the September 2001 terror attack in New York.

PT Garuda was claimed to have engaged in fixing fuel surcharges in Indonesia, which the judge accepted was the case.

Air New Zealand general counsel John Blair said the decision helped identify the clarity of legal boundaries in markets where international airlines operate.

"The distinction between where competitive markets exist and where jurisdiction lies determines which regulators’ requirements must be met," Blair said in a statement. "Respect for national sovereignty and legal jurisdiction has been a foundation of the aviation industry since 1919."

ACCC chairman Rod Sims said the judgment was "long and complex" and the regulator will "carefully consider” it.

Earlier this year Air New Zealand was awarded $3.2 million in legal costs as part of a class suit settled by other airlines in Australia.

The New Zealand airline is still defending a class action in the US, which is its last remaining litigation relating to the air cargo cartel.

The shares were unchanged at $2.02, and have gained 29 percent this year.

 

 

 

 

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