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Home News & Events COMPETITION LAW NEWS: EU fines Eleven Airlines Euros 800,000 for price-fixing cartel

COMPETITION LAW NEWS: EU fines Eleven Airlines Euros 800,000 for price-fixing cartel

Saturday, 15 April 2017 23:14

On March 17th, 2017, the European Commission issued a press release relative to the re-adoption of a fine imposed thereby on eleven [11] air cargo carriers for a price fixing cartel operated by the airlines between December 1999 and February 2006, in the airfreight services market covering flights from, to and within the European Economic Area.

The fine imposed amounted to € 776,465,000.

The cartel arrangements consisted of numerous contacts between airlines, at both bilateral and multilateral level to fix the level of fuel and security surcharges. It is interesting to note that the Commission's original decision of 2010 was annulled by the General Court on procedural grounds. In December 2015, the Court annulled the Commission's 2010 decision after finding a discrepancy between the reasoning and operative part of the decision. The reasoning part of the decision described the infringement as a single and continuous infringement covering all addressees. However, some articles of the operative part suggested that there were four separate infringements with only some addressees participating in all four. The Commission's March 2017 Decision addresses the Court's conclusions by bringing the operative part in line with the reasoning part.

All carriers except Qantas appealed to the EU's General Court against the Commission's 2010 decision. Since Qantas did not appeal, the 2010 Decision became final or res iudicata on the Australian airline.

European Commissioner Margrethe Vestager, responsible for competition policy, is quoted to have said that: “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 behaviour.”

The companies then 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. Indeed, the investigation was instigated as a result of an immunity application by Lufthansa filed in December 2005. In February 2006, the Commission carried out unannounced inspections better known as ‘dawn raids’, at the premises of a number of providers of airfreight services.

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 eleven [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 has maintained 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 anti-competitive behaviours 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.