Cathay Pacific Airways, Thai Airways International and MASKargo have been fined a combined $9.6 million by the High Court of New Zealand for engaging in cargo price fixing activities.
The three carriers pleaded guilty to various violations occurring from February 2000 to February 2006.
Cathay paid the largest fine, $4.3 million, for setting fuel and security surcharges on flights from India to New Zealand, among other routes. Thai, which paid $2.7 million, illegally set surcharges on cargo routing to New Zealand from Indonesia and Malaysia. MASkargo, on the hook for $2.6 million, pleaded guilty to price fixing on flights from Indonesia and Switzerland.
"The commission is pleased to have settled with a further three airlines in this significant case. The penalties are a reminder to both New Zealand and overseas-based companies that colluding on prices is illegal and may result in substantial penalties under the Commerce Act,” the Commerce Commission’s Mark Berry said in a statement. “The commission is committed to pursuing cartels that affect New Zealand markets.”
Price-fixing is a violation of section 30 of New Zealand’s Commerce Act. Violations carry a fine of up to $10 million.
New Zealand’s Commerce Commission initiated proceedings against 13 carriers in December 2008. So far, the New Zealand court has already received guilty pleas, and fines, from British Airways, Cargolux, Korean Air Lines, Emirates Airline, Japan Airlines, Qantas Airways and Singapore Airlines Cargo. Cathay and Thai were in that original group, but charges against MASkargo — and its parent company, Malaysian Airlines — occurred later.
The commission dropped its proceedings against United Airlines and PT Garuda Indonesia, two of the original 13, last year. Air New Zealand is the only carrier that hasn’t resolved its case.
"Anti-cartel enforcement activity is a priority for the commission," former commission chair Paula Rebstock said when the initial 13 charges were announced in 2008. "Participation in cartel activity is internationally
regarded as one of the most egregious forms of anti-competitive
behavior. It results in consumers and businesses paying higher prices
and having less choice than if competitors were competing honestly.
Cartels have grown on a worldwide basis and often operate at a global
level. Importantly, cartels undermine New Zealand's international
Similar price-fixing cases have cropped up around the world, with the U.S. Justice Department leading the charge against price fixers. Its investigation snared 22 airlines and 21 airline executives by the end of 2011. The investigation generated nearly $2 billion in fines, and a number of air cargo executives were given jail time. Civil class action lawsuits started cropping up soon after carriers pleaded guilty, and by the end of 2011, $485 million in claims had been paid out.
The fines in the U.S. Justice Department cases were much more severe than those meted out by New Zealand authorities. The first two carriers that pleaded guilty early on in the nearly six-year process, British Airways and Korean Air Lines, paid a total of $300 million in fines.
Subsequent cases brought by the department in later years against freight forwarders are also related to the air cargo price fixing saga, which, as long as Air New Zealand’s case remains open, will continue to evolve. - Jon Ross