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Qantas ordered to pay record $6.5m

Thursday 12th May 2011

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The High Court has ordered Qantas to pay a $6.5 million penalty - the highest yet for price fixing in this country.

The penalty was recommended to the court by both the Commerce Commission and Qantas as part of a pre-trial settlement in the air cargo cartel case. It was confirmed yesterday by the High Court at Auckland, the commission said.

At the same time in another courtroom, the commission was opening its case in the first stage of the cartel proceeding in which it alleges several international airlines colluded to raise the price of freighting cargo.

In the Qantas penalty decision, the judge had noted the starting point for the penalty was $13 million, with a 50% discount for Qantas' high level of cooperation with the commission's investigation, the commission said.

"As soon as the nature and scale of the problem came to the notice of Qantas senior management and its board, the commission was advised that Qantas would cooperate in every respect," Justice Allan said in his judgment.

"It has continued to do so over a significant period. In particular, it has proactively provided extensive evidence and documents detailing the collusive FSU (Fuel Surcharge Understanding) and its own participation in that FSU."

Qantas had also committed to making its staff available as witnesses in the cartel case against the defending airlines.

Commission general counsel for enforcement Mary-Anne Borrowdale said it was appropriate to recognise Qantas admitted its price fixing at the earliest opportunity, and was providing genuine assistance with the commission's case against the defending airlines.

The Qantas penalty brought the amount achieved in settlements of the cartel case to $14.1 million, the commission said.

It had also settled with British Airways and Cargolux International Airlines.

Airlines continuing to defend the charges are Air New Zealand, Cathay Pacific Airways, Emirates, Japan Airlines International Co, Korean Air Lines Co, Malaysian Airlines System Berhad, Singapore Airlines Cargo Pte and Singapore Airlines, and Thai Airways International Public Company. The stage one hearing of the cartel case was scheduled to continue until early June, the commission said.



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