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EGL settles with Commerce Commission

Friday 17th December 2010

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Freight forwarding company EGL Inc is paying a penalty of $1.15 million after settling with the Commerce Commission, which considered a surcharge for new security measures in the UK to be anti-competitive.

EGL admitted breaching the Commerce Act by agreeing a UK new export system surcharge for security measures at airports for exports from the UK with other freight forwarders.

The commission said the surcharge had the effect of controlling and maintaining prices for the supply of freight forwarding services from the UK to New Zealand.

The High Court at Auckland yesterday approved the resolution reached between the commission and EGL, and ordered EGL to pay a penalty of $1.15 million and the commission's litigation costs of $50,000.

"Had the cartel agreement not existed, market forces would have been left to determine the level of any surcharges customers would be prepared to accept," the commission's general manager of enforcement Kate Morrison said.

In his judgment, Justice Rodney Hansen regarded EGL's conduct as hard core cartel behaviour that enabled all members of the cartel to impose a surcharge without the need to consider their competitors' likely response.



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