13 airlines accused of cartel behaviour to be prosecuted
New Zealand’s Commerce Commission has filed proceedings in the High Court of New Zealand against 13 international airliners for alleged cartel behaviour for more than seven years. Seven airline staff of a high level in their respective companies also face prosecution.
In a press release the Commerce Commission said, “Airlines throughout the world colluded to raise the price of freighting cargo by imposing fuel surcharges for more than seven years. This affected the price of cargo both into and out of New Zealand.”
The Commerce Commission said that between 1999 and 2000, the 13 airplane operators entered into an illegal agreement imposing fuel surcharges for six years until 2006. Following the 9/11 attacks on America, a security surcharge was also imposed, according to the New Zealand Government’s competition regulatory agency.
The allegations also involve a series of regional price fixing agreements.
Around 60 airline operators are involved, but only 13 are being focussed on; including Air New Zealand, British Airways and Australian-based Qantas Airways. More staff could be involved too.
The agency bringing the charges have claimed that the anti-competition colluding has “extensively” harmed the New Zealand economy. It is estimated that the price fixing generated a revenue of NZ$2.9 billion over seven years.
Commerce Commission Chair Paula Rebstock said, “Participation in cartel activity is internationally regarded as one of the most egregious forms of anti-competitive behaviour.
“Many New Zealand businesses and every consumer will have been directly affected by the increased air freight costs over many years. It will have resulted in increased costs for exporters and importers and higher overall prices for many consumer goods.”
State owned Air New Zealand’s general counsel John Blair says the Commission is merely “grandstanding” and they will defend the charges before them outright.
International equivalents of New Zealand’s Commerce Commission are already investigating, with several companies already being issued massive fines amounting to tens, even hundreds, of millions of dollars each.
Ms Rebstock said, “New Zealand is a long way from its overseas markets and so the harm to our economy and our ability to compete internationally will have been disproportionately greater than in other jurisdictions in which the conduct took place.”
The Commerce Commission were tipped off from an industry insider, whose airliner have been granted immunity from prosecution.
The airlines the Commerce Commission is filing proceedings against are:
- Air New Zealand Limited
- British Airways plc
- Cargolux International Airlines S.A
- Cathay Pacific Airways Limited
- PT Garuda Indonesia
- Japan Airlines International Co Limited
- Korean Airlines Co Limited
- Malaysian Airline System Berhad Limited
- Qantas Airways Limited
- Singapore Airlines Cargo Pte Limited and Singapore Airlines Limited
- Thai Airways International Public Company Limited
- United Airlines Incorporated