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Qantas and British Airways fined $25 million for forming cartel news
11 December 2008

Qantas Airways and British Airways were fined $18 million by an Australian court yesterday for having formed a cartel to fix freight charges in concert with other international airlines after legal action was brought on them by the Australian Competition and Consumer Commission (ACCC) in October.

The Federal Court in Sydney has ordered Qantas to pay $13 million and British Airways $5 million, an amount which is far lesser than penalties handed out to some of the other 30 airlines alleged to have taken part in the global cartel.

Both the airlines have been ordered to pay approximately $130,000 each toward the ACCC's costs.

ACCC chairman, Graeme Samuel said the airlines had been fined on a lower scale because they had co-operated with its investigation.

"This action and the recent introduction of the bill criminalising cartel conduct will create a much stronger disincentive for cartels forming and continuing," Samuel said.

"It will also step up pressure on cartel members to take advantage of the ACCC's immunity and co-operation policies to report their fellow cartel members before they find themselves facing possible time behind bars. There are no safe havens for illegal cartel conduct," he added.

Qantas admitted that it had "understandings" with other airlines on fuel surcharges relating to air cargo between 2002 and early 2006, the commission said in a statement posted to the Australian stock exchange.

The airline said at the time the price fixing did not relate to its passenger service and has conducted an in depth investigation on its own after being made aware of the incident.

The US Department of Justice fined Qantas $61 million last year for price-fixing $244.4 million worth of air cargo between January 2000 and February 2006 and its former head of freight in Los Angeles, Bruce McCaffrey, was jailed for eight months for his role in forming a cartel.

Qantas still has to face a class action initiated by freight customers in the US, while in Europe, regulators are still probing more than two dozen airlines for price fixing, although Qantas has already indicated that it will admit liability.

Hundreds of businesses have filed court cases worth millions of dollars against seven airlines and Qantas is one among them.

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Qantas and British Airways fined $25 million for forming cartel