Thirteen airlines accused of price-fixing, illegal freight cartel

Business Materials 15 December 2008 04:04 (UTC +04:00)

New Zealand's competition watchdog Commerce Commission launched legal action Monday against 13 international airlines and seven executives, accusing them of operating an illegal air freight cartel, dpa reported.

The commission filed papers in the Auckland High Court alleging that airlines throughout the world colluded to raise the price of freighting cargo by imposing surcharges for fuel and added security measures for more than nine years.

Chairwoman Paula Rebstock said this affected the price of cargo into and out of New Zealand, impacting every consumer and most businesses.

The accused airlines are: Air New Zealand, British Airways, Cargolux International Airlines, Cathay Pacific, PT Garuda Indonesia, Japan Airlines, Korean Airlines, Malaysian Airline System, Qantas Airways, Singapore Airlines Cargo Pte Limited and Singapore Airlines, Thai Airways and United Airlines.

Rebstock said 60 airlines had made an illegal global agreement in 1999-2000 under the auspices of the International Air Transport Association (IATA), and similar action was being taken by other competition authorities, including the US Department of Justice, the Australian Competition and Consumer Commission and the European Commission.

She said the cartel had inflicted "very significant harm" on the New Zealand economy and the commission had focused its action on airlines that had the greatest impact on the country, as well as the most culpable individuals.

Rebstock said the airlines earned more than 400 million New Zealand dollars (220 million US dollars) a year transporting air cargo to and from New Zealand and received revenue of about 2.9 billion New Zealand dollars over the nine years that the agreement was in place.

She said some airlines were cooperating with the commission, but it was seeking record fines to deter cartels from using New Zealand as a base.

"Cartels are insidious," Rebstock said. "They are difficult to detect and extremely difficult to investigate because of their secretive and international nature. The commission will continue to strongly pursue cartels involved in price-fixing and other anti-competitive conduct."

Air New Zealand counsel John Blair said in a statement that the airline would vigorously defend the proceedings, which related to four former and one current employee of its cargo division.

"Despite extensive reviews of our own files and interviews with key staff, Air New Zealand has not been able to identify any evidence of price-fixing or cartel behaviour," he said.