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Air France-KLM subsidiaries fined for cartelisation by Australian regulator news
17 February 2009

Continuing with its ongoing probe against several airlines for cartelisation, the Federal Court in Sydney has fined Air France and KLM, both subsidiaries of the Air-France-KLM Group, Martinair and Cargolux a total of A$16 million ($10.4) for forming a cartel to fix air-cargo shipments from Australia.

Europe's biggest carrier, Air France-KLM was fined A$6 million, Cargolux A$5 million and Martinair A$5 million in a case bought on by the Australian Competition and Consumer Commission (ACCC) for breaking the price-fixing laws of Australia's Trade Practices Act.

Air France admitted to having arrived at understandings with Lufthansa, Martinair with KLM and Cargolux and Cargolux with Lufthansa, Air France and KLM for fixing rates in their international air cargo operations.

"This matter sends a clear message to those involved in cartel behaviour -- the ACCC will not stop its endeavours to identify and bring to an end illegal price-fixing conduct," commission chairman Graeme Samuel said in a statement.

The ongoing investigations in October by the ACCC, had secured court convictions against Qantas Airways and British Airways for the same offence and in December both the airlines agreed to pay fines totaling $18 million. (See: Qantas and British Airways fined $25 million for forming cartel)

The total fines levied so far against airlines operating out of Australia for cartelisation has come to A$41 million and the ACCC said that more airlines are under the scanner.

Meanwhile on the other side of the continent, three carriers have bargained for plea agreements with the US Department of Justice to pay fines for price fixing on commercial cargo shipments.

Chile's LAN Cargo and its Brazilian subsidy, Aerolinhas Brasileiras, have agreed to pay a fine of $109 million for conspiring to fix prices while Israel's El Al has agreed to pay a fine of $15.7 million.

The three airlines among others conspired to collectively raise cargo freight charges through fuel surcharges.

Other airlines involved in this conspiracy are Air New Zealand; British Airways; Cargolux International; Cathay Pacific; Emirates; PT Garuda Indonesia; Japan Airlines; Korean Airlines; Malaysian Airline System; Qantas; Singapore Airlines Cargo and Singapore Airlines; Thai Airways; and United Airlines.

In India, last week, minister for civil aviation Praful Patel had come down strongly against reports of cartelised move by domestic airlines to withdraw all fare concessions and instead announce steep hikes in base air fares. (See: Praful Patel warns airlines against cartelisation)

The warning came a day after all major airlines announced fare hikes. The fare hikes were unexpected since fuel prices have come down drastically since last year.

The Monopolies and Restrictive Trade Practices Commission (MRTPC) got into the act and ordered an investigation probe into the sudden air fare rise by all airlines, including national carrier Air India. (See: Air fare hikes attract MRTPC probe)

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Air France-KLM subsidiaries fined for cartelisation by Australian regulator