Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC re-adopts price fixing cartel decision, imposes €776M fine on air cargo carriers, (Mar 17, 2017)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has re-adopted a decision against 11 air cargo carriers and imposed a fine of € 776 million for operating a price fixing cartel, the agency announced today. The EC's original decision was annulled by the General Court on procedural grounds.

The Commission’s investigation began as a result of an immunity application by Lufthansa filed in December 2005. In February 2006, the EC carried out unannounced inspections at the premises of a number of providers of airfreight services.

In November 2010, the Commission adopted a decision that imposed fines totaling €799,445,000 on 11 air cargo carriers who participated in a price fixing cartel, from December 1999 to February 2006, in the airfreight services market covering flights from, to and within the European Economic Area. The cartel arrangements consisted of numerous contacts between airlines, at both bilateral and multilateral level to fix the level of fuel and security surcharges.

The companies included Air Canada, Air France-KLM, British Airways, Cargolux, Cathay Pacific Airways, Japan Airlines, LAN Chile, Martinair, Qantas, SAS, and Singapore Airlines.Cartel members Lufthansa and its subsidiary, Swiss International Air Lines, received full immunity from fines under the Commission's 2006 Leniency Notice as they brought the cartel to the Commission's attention and provided valuable information. Furthermore, the fines for the majority of carriers were reduced for their cooperation with the Commission under the Leniency Notice.

All but one of the companies—Qantas—that were subject to the 2010 fines challenged the decision before the EU's General Court. In December 2015, the General Court annulled the Commission's decision against the 11 cartel participants that appealed, concluding that there had been a procedural error. However, the court did not rule on the existence of the cartel.

In re-adopting its decision, the EC maintains that these air cargo carriers participated in a price fixing cartel and is re-establishing the fines. This new decision addresses the procedural error identified by the General Court while remaining identical in terms of the anticompetitive behaviors targeted by the Commission.

"Millions of businesses depend on air cargo services, which carry more than 20% of all EU imports and nearly 30% of EU exports," said Commissioner Margrethe Vestager, in charge of competition policy. "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."

Companies: Air Canada; Air France-KLM; British Airways; Cargolux; Cathay Pacific Airways; Japan Airlines; LAN Chile; Martinair; Qantas; SAS; Singapore Airlines

News: Antitrust