Europe

European Commission re-adopts decision and fines air cargo carriers €776 million for price-fixing cartel

Cargolux B747-400
Tis Meyer/Planepics.org

The European Commission has re-adopted a cartel decision against 11 air cargo carriers and imposed a fine totaling € 776 465 000 for operating a price–fixing cartel.

The Commission’s original decision was annulled by the General Court on procedural grounds.

Commissioner Margrethe Vestager, in charge of competition policy, said:

“Millions of businesses depend on air cargo services, which carry more than 20% of all EU imports and nearly 30% of EU exports. 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.”

In November 2010, the Commission imposed fines of nearly €800 million 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 fined in 2010 were Air Canada, Air France-KLM, British Airways, Cargolux, Cathay Pacific Airways, Japan Airlines, LAN Chile, Martinair, Qantas, SAS and Singapore Airlines. A 12th cartel member, Lufthansa, and its subsidiary, Swiss International Air Lines, received full immunity from fines.

All but one of the companies (Qantas) subject to the 2010 decision 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, it did not rule on the existence of the cartel.

The Commission maintains that these air cargo carriers participated in a price-fixing cartel and is adopting a new decision and 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. The decision confirms that the Commission will not let cartels go unpunished. Cartels are illegal and cause consumers and business to suffer.

The fines were set on the basis of the Commission’s 2006 Guidelines on fines. They were fixed at exactly the same level as in the 2010 Decision for all the companies, except for Martinair. In the 2010 decision, Martinair’s fine had been capped at 10% of the company’s total turnover in 2009. EU rules allow a maximum fine of 10% of the total turnover in the year preceding the adoption of the decision. Martinair’s turnover is significantly lower in 2016 than in 2009. As a result, Martinair’s fine has been lowered to reflect this.

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