The European Commission (EC) has reinstated fines totaling €776 million ($834 million) on 11 airlines for operating a price-fixing cartel on air freight from 1999 to 2006.
More legal hearings are likely as at least one of the carriers immediately said it would appeal the decision.
The EC originally imposed the penalties in November 2010, but these were annulled by a decision of the European Union’s (EU) General Court in December 2015 on procedural grounds, which ruled there was a technical discrepancy in the prosecution.
In a March 17 announcement, the EC said it had resolved the discrepancy and was re-imposing the financial penalties on 11 air cargo carriers—Air Canada, Air France/KLM, British Airways, Luxembourg-based Cargolux, Hong Kong flag carrier Cathay Pacific Airways, Japan Airlines, LAN Chile, Dutch cargo carrier Martinair, Australia's Qantas, SAS Scandinavian Airlines and Singapore Airlines.
The EC said that a 12th member of the cartel, Lufthansa and its subsidiary Swiss International Air Lines, was spared from the financial penalties after it applied for immunity in 2005 and revealed details of the alleged arrangements between the airlines.
These were said to consist of collusion between the airlines at both bilateral and multilateral levels to fix the level of fuel and security surcharges on cargo.
After the initial verdict, all the airlines except Qantas appealed. The financial penalty thus became final for Qantas.
“Millions of businesses depend on air cargo services, which carry more than 20% of all EU imports and nearly 30% of EU exports,” EC Commissioner-competition policy Margrethe Vestager said.
“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.”
The EU can fine companies participating in cartels up to 10% of their revenue in the year preceding the adoption of a verdict.
SAS immediately said it would appeal. “We strongly question the European Commission’s move to re-impose a decision that has already been annulled once by the [General Court],” SAS general counsel Marie Wohlfahrt said.
“Throughout the entire process, SAS has cooperated with the European Commission and, for more than 11 years, has argued against the European Commission’s perception that SAS Cargo had participated in a global cartel.”
Nevertheless, the fine would be recognized as a nonrecurring expense by SAS in its earnings for 2Q 2016/2017.
Air France-KLM, which will be fined €325 million if the penalties become final, said it would analyze the new decision and whether to appeal it again at the General Court. It added that the fines had been covered in its financial accounts since 2010.
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