The European Commission has re-adopted a cartel decision against 11 air cargo carriers after the European Union competition watchdog’s initial decision was annulled on procedural grounds.
The EC will impose fines totaling more than 776 million euros (U.S. $834.44 million) on the carriers, which have been accused of collusion to fix fuel and security surcharges between December 1999 and February 2006, according to a statement from the commission. The EC began investigating the airlines in 2005 after Lufthansa alerted the agency to potential anti-competitive behavior.
The commission initially handed down 790 million euros in fines in the case back in 2010, but those penalties were annulled in December 2015 by the EU’s General Court due to a procedural error. The court said at the time it reversed the EC’s 2010 ruling because it was contradictory
in that the commission accused the airlines of cooperating in a single cartel, but was only able to show proof of illegal activity by some carriers on some routes.
All of the airlines, with the exception of Australia’s Qantas Airways, challenged the EC’s decision before the general court.
Several of the carriers had their fines reduced under what is known as the “Leniency Notice,” which provides protection for companies that cooperate in cartel investigations, while two - Lufthansa and Swiss International Air Lines - saw their fines eliminated completely for bringing the potentially anti-competitive behavior to the attention of the commission.
The individual fines and reduction amounts are as follows: Air Canada, 21.04 million euros (15 percent); Air France, 182.92 million euros (20 percent); KLM, 127.16 million euros (20 percent); Martinair, 15.4 million euros (50 percent); British Airways, 104.04 million euros (10 percent); Cargolux, 79.9 million euros (15 percent); Cathay Pacific Airways, 57.12 million euros (20 percent); Japan Airlines, 35.7 million euros (25 percent); LAN Chile, 8.22 million euros (20 percent); SAS, 70.17 million euros (15 percent); and Singapore Airlines, 74.8 million euros.
Cargolux and Air France KLM said in separate statements they would review the EC’s latest decision carefully before making any decisions with regard to an appeal and continue to cooperate with the commission.
Marie Wohlfahrt, general counsel at SAS, said the airline “strongly” questions the reimposition of a previously annulled fine and would continue to argue its innocence.
“Throughout the entire process, SAS has cooperated with the European Commission and, for more than eleven years, has argued against the European Commission’s perception that SAS Cargo had participated in a global cartel,” said Wohlfahrt.
“SAS takes the competition rules extremely seriously and does not accept any breaches,” she added. “We have a clear regulatory framework in place for compliance with competition law. This encompasses information, guidelines, training programs and control procedures.”
“Millions of businesses depend on air cargo services, which carry more than 20 percent of all EU imports and nearly 30 percent of EU exports,” Margrethe Vestager, European commissioner in charge of competition policy, said of the decision. “Working together in a cartel rather than competing to offer better services to customers does not fly with the Commission. Today's decision ensures that companies that were part of the air cargo cartel are sanctioned for their behavior.”