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Commission settles with second freight forwarding company

Wednesday 22nd December 2010

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The Commerce Commission is signalling further proceedings against freight forwarders after a second settlement resulted in a $2.5 million penalty against a company.

On December 16, EGL Inc was ordered to pay a penalty of $1.15 million and costs of $50,000 for anti-competitive conduct relating to a security surcharge.

The commission today said the High Court at Auckland had endorsed a settlement with Geologistics International (Bermuda) Ltd, imposing a penalty of $2.5 million and ordering payment of the commission's litigation costs of $50,000.

Geologistics was found to have contravened the Commerce Act by entering into and giving effect to the Air AMS surcharge agreement together with other freight forwarders. The surcharge related to customs clearance in the United States for goods air freighted between New Zealand and the US.

The commission began an investigation in 2007 into alleged collusion by a number of multinational companies in the international freight forwarding market. This followed a confidential application for leniency by one of the companies involved in the conduct.

The judgment issued today said there had been hard core cartel behaviour.

"The cost of airfreight is very important to New Zealand exporters and importers. Because of the distance from our biggest markets and sources of supply, it is vital that air freight services are subject to competition between freight forwarders," said Kate Morrison, the commission enforcement general manager.

The commission is hopeful of settling proceedings with further parties in the near future.



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