Cargo carriers' cartel pays $52 million in fines in Australia

Cargo carriers that had entered into illegal catels, jacking up rates by imposing 'fuel' and 'security' surcharges, are now being made to pay a hefty penalty by Australia's competition watchdog, which has already slapped $52 million in fines on eight airlines.

The Australian Competition and Consumer Commission (ACCC) has been probing several airlines that had formed a cartel between 2003 and 2006, reaching understandings with each other on cargo charges.

On Monday, a federal court in Australia slapped a fine of $5.5 million on Korean Air Lines (KAL), after it admitted it had joined the cartel on fuel and security surcharges formed by several freight carriers flying cargo from Indonesia to several countries including Australia.

Rod Sims, chairman, ACCC, said the competition watchdog would have sought a higher penalty from KAL had it not cooperated with it. The airline provided documents that could be used against other carriers that have disputed the charges, he said. ''These proceedings demonstrate the ACCC's determination to pursue cartel conduct,'' added Sims.
The $52 million in fines imposed by the ACCC includes a $20 million fine paid by Australia's Qantas for its role in the cartel. This was the highest amount of fine imposed by the watchdog.

The ACCC initiated proceedings against KAL in March 2010. The airline admitted it had reached understandings with other international airlines relating to fuel and security surcharges on cargo out of Indonesia to Australia from May 2003 to February 2006. It had also entered into such illegal deals with other airlines for customs fees on cargo from Australia to Indonesia between May 2004 and October 2005.

The competition watchdog has also reached settlements with other carriers including Japan Airlines, British Airways, Cargolux, Martinair, the now-merged Air France and KLM, and Qantas. However, proceedings against several other carriers including Singapore Airlines, Cathay Pacific, Emirates, Air New Zealand, Malaysian and Thai continue, as they have denied being involved in the scam. Indonesia's Garuda filed an appeal in the high court resulting in a freeze in the proceedings against it.