New Zealand Alleges Cargo Cartel
WELLINGTON, New Zealand — New Zealand’s competition watchdog said it has initiated court proceedings Monday against 13 airlines, including some of the world’s leading international carriers, alleging “extensive and long-term cartel activity in the air cargo market” over seven years.
The Commerce Commission alleges airlines throughout the world colluded to raise cargo prices in and out of New Zealand via fuel surcharges.
It alleges the airlines entered an illegal global agreement in 1999/2000 under the auspices of the trade organization International Air Transport Association.
“The airlines imposed the fuel surcharges between 2000 and 2006. The allegations also involve a series of regional price-fixing agreements,” commission chair Paula Rebstock said.
“In addition, the commission alleges that a number of airlines conspired to price fix through the imposition of a security surcharge immediately following the 9/11 terrorist attacks,” commission chair Paula Rebstock said.
Ms. Rebstock said she was confident of success as one airline, in exchange for immunity, would give evidence for the commission while two of the 13 — British Airways PLC and Qantas Airways Ltd. — have agreed to fully cooperate in exchange for halving penalties.
The action follows similar successful actions in the U.S., Europe and Australia.
Ms. Rebstock expects penalties in the “tens of millions of dollars.”
“We do expect these penalties to be quite extensive and we will be arguing this is, if not the most serious cartel we have seen in New Zealand, one of the most [serious].”
Air New Zealand Ltd., likely to be a key defendant, said it would vigorously defend the case to be heard in the Auckland High Court.
The 76% government-owned airline said the commission had failed to discuss the issue over almost three years and it criticized the regulator’s actions as “grandstanding.”
It said it had spent millions of dollars sifting millions of documents and found no evidence of price fixing or cartel behavior.
Ms. Rebstock said the fixing caused extensive harm to the New Zealand economy, affecting revenue of 2.9 billion New Zealand dollars (US$1.58 billion) until it stopped in 2006. New Zealand was disproportionately affected because of its distance from markets, she added.
Qantas said that as soon as it learned it may have breached competition laws its board instructed management to fully cooperate with the NZCC.
Among the other airlines cited are Cathay Pacific Airways Ltd., Singapore Airlines Cargo Pte. Ltd. and Singapore Airlines Ltd., Korean Airlines Co. and United Airlines Inc.
Cathay Pacific said it will “vigorously defend” itself against the charges. Singapore Airlines also said that SIA cargo will defend the charges while Korean Airlines said that it supports free trade and fair competition practices.
Seven airline staff from unnamed airlines, including senior executives, were cited as promoting the action and or failing to stop it when in a position to do so.
The commission was working with the U.S. Department of Justice, the Australian Competition and Consumer Commission and the European Commission, all of which had successfully taken similar actions.
By SIMON LOUISSON
Source: The Wall Street Journal
Tags: Air New Zealand, Cathay Pacific Airways, new zealand, Qantas Airways, Singapore Airlines
This entry was posted on Wednesday, December 17th, 2008 at 11:54 am and is filed under Cargo & Shipping News. You can follow any responses to this entry through the RSS 2.0 feed.