Australian regulator wins appeal against Air NZ, Garuda over cargo cartel

Monday 21st March 2016

The Australian Competition and Consumer Commission has won an air cargo cartel appeal against PT Garuda Indonesia and Air New Zealand that agreed surcharges on cargo breached that nation's price fixing laws.

The two are the only airlines of 15 that haven't settled with the ACCC since the Australian regulator began proceedings for price fixing on air cargo at ports outside of Australia destined for that nation. The Federal Court ruling is that the price fixing took place in a "market in Australia".

"This decision is significant because it confirms the ACCC's view that the conduct by the airlines in fixing air cargo surcharges to be paid by Australian importers and ultimately passed on to Australian consumers were caught by Australian competition laws," the ACCC said.

Total fines of A$98.5 million were imposed by the courts against the 13 airlines that settled, with the largest, A$20 million, imposed on Qantas Airways.

The ACCC's original proceedings against Garuda and Air New Zealand were dismissed in 2014 in a ruling that found the behaviour didn't occur in a "market in Australia" as was required by the Trade Practices Act 1974 that was in force at the time. The ACCC appealed that ruling to the full court of the Federal Court.

The regulator said matters against the two airlines had been remitted to the court to determine relief to be granted, including declarations, injunctions and penalties.

The Australian action is one of a number that has embroiled major airlines, including a US class action filed in 2006 on behalf of six freight forwarders and has been led by global litigation firm Hausfeld that has seen 26 carriers cut settlement deals totalling US$1.19 billion. In that case, Air New Zealand and Air India are the only carriers left defending the civil lawsuit.

In New Zealand, the Commerce Commission reached settlements with 11 carriers, including Air New Zealand, securing penalties totalling $45 million, or about 10 percent of the revenue generated from air freight forwarding services in and out of New Zealand in 2006.

BusinessDesk.co.nz

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