News / EC competition watchdog reimposes €776m fine for air cargo cartel carriers

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Ten airfreight carriers accused of being in a price-fixing cartel are to have annulled fines totalling €776m ($833m) levied once more after the EC announced it had reimposed the penalties.

In November 2010, the commission found 11 carriers guilty of fixing fuel and security surcharges at both a bi-lateral and multi-lateral level for seven years, between 1999 and 2006.

A twelfth carrier, Lufthansa, brought the cartel to the commission’s attention and, under the 2006 Leniency Notice, received full immunity – as did its subsidiary Swiss International Airlines.

Australian carrier Qantas accepted the verdict, but the other 10 challenged the decision, with the EU’s General Court annulling it on procedural grounds in December 2015.

The annulment followed a discrepancy between the reasoning and operative parts of the decision, with the reasoning describing a single and continuous infringement covering all addressees.

However, some articles of the operative part suggested that there were four separate infringements, with only some defendants participating in all four.

The court, meanwhile, did not deny the existence of a cartel, and the EC’s competition directorate claims to now have addressed the procedural error identified by the court.

The EC’s new decision addresses the court’s conclusions by bringing the operative part in line with the reasoning.

The following fines will be re-levied: Air France, €182.9m; KLM, €127.2m; British Airways, €104m; Cargolux, €80m; Singapore Airlines, €74.8m; SAS, €70.2m; Cathay Pacific, €57.1m; Japan Airlines, €35.7m; Air Canada, €21m; Martinair, €15.4m; and LAN Chile (now one half of LaTam, following its merger with Brazil’s TAM) €8.2m.

Commissioner of competition policy Margrethe Vestager said millions of businesses depended on air freight, which carries more than 20% of EU imports and nearly 30% of EU exports.

“Working together in a cartel rather than competing to offer better services to customers does not fly with the commission,” added Ms Vestager.

“Today’s decision ensures that companies that were part of the air cargo cartel are sanctioned for their behaviour.”

Cargolux and Air France, which now owns KLM and Martinair, have said they will analyse the new decision and may apply for a new annulment.

In a statement, Cargolux said it acknowledged the decision, adding it had not come as a surprise, with previous EC communications indicating its intention to re-impose the fines.

“Cargolux, however, welcomes the recognition by the commission that no undertaking should be put in a worse position simply as a result of the errors by the commission which were the basis for the annulment of the commission’s 2010 decision,” the carrier added.