IN THE film Godfather: Part III, Michael Corleone (played by Al Pacino) famously complained: “Just when I thought I was out, they pull me back in.”
Pacino’s mafia character was referring to a rather unpleasant chapter in his life which he thought had finally closed. To his chagrin, a family member informed him in the kitchen, of all places, that this old wound had been reopened, writes Thelma Etim.
Some of the world’s most embattled international air cargo carriers probably ended last week feeling the same as Corleone. For the second time, a cartel consisting of the cargo divisions of Air Canada, Air France-KLM, British Airways, Cargolux, Cathay Pacific Airways, Japan Airlines, LAN Chile, Martinair, Qantas, SAS and Singapore Airlines all discovered they have been collectively fined almost €800m by the European Commission.
The governing body says they operated a price-fixing cartel from December 1999 to February 2006, even though the arguments had previously been thrown out of court.
But airfreight price fixing, allegedly involving flights from, to and within the European Economic Area and consisting of numerous ‘illegal’ contacts between airlines, at both bilateral and multilateral level “in order to fix the level of fuel and security surcharges”, did take place according to a new official statement from the Commission.
All but one of the cartel – Australia’s Qantas – successfully appealed against the Commission’s November 2010 ruling in the European Union’s General Court which, five years later, annulled the decision against them, concluding there had been a “procedural error”.
But the court did not rule on the existence of the cartel, notes the Commission’s latest statement, issued last week. Instead it maintains that these carriers participated in a price-fixing cartel. It therefore re-established the fines.
“This new decision addresses the procedural error identified by the General Court while remaining identical in terms of the anti-competitive behaviours targeted by the Commission,” the statement points out.
“The decision confirms that the Commission will not let cartels go unpunished. Cartels are illegal and cause consumers and business to suffer,” it adds.
Commissioner Margrethe Vestager, who is responsible for competition policy, is unequivocal in her quest to effectively enforce competition rules in the areas of antitrust and cartels. “Millions of businesses depend on air cargo services, which carry more than 20 per cent of all EU imports and nearly 30 per cent of EU exports,” she notes. “Working together in a cartel rather than competing to offer better services to customers does not fly with the Commission.”
Vestager adds: “Today’s (17 March 2017) decision ensures that companies that were part of the air cargo cartel are sanctioned for their behaviour.”
The 12th cartel member, Lufthansa and its subsidiary Swiss International Air Lines, received full immunity from fines, as it brought the cartel to the Commission’s attention and provided valuable information.
The individual fines are listed below:
|Fine (€)*||Reduction under the Leniency Notice|
|Air Canada||21 037 500||15%|
|Air France||182 920 000||20%|
|KLM||127 160 000||20%|
|Martinair||15 400 000||50%|
|British Airways||104 040 000||10%|
|Cargolux||79 900 000||15%|
|Cathay Pacific Airways||57 120 000||20%|
|Japan Airlines||35 700 000||25%|
|LAN Chile||8 220 000||20%|
|SAS||70 167 500||15%|
|Singapore Airlines||74 800 000|
|Swiss International Air Lines||0||100%|
(*) Legal entities within the undertaking may be held jointly and severally liable for the whole or part of the fine imposed.