EU accuses carriers of fixing cargo prices

2008-1-12

British Airways, Japan Airlines and an unspecified number of other carriers are charged by European Union regulators for breaking competition rules following an investigation into alleged price-fixing of the airlines' cargo divisions.

The European Commission spokesman said Jonathan Todd the commissioner has sent official charge sheets to a number of companies.

The EU and the United States have been investigating more than a dozen airlines since at least early 2006 to discover if there was collusion in the air cargo industry to fix prices on surcharges for fuel, security and insurance.

Under EU rules, companies can be fined 10 percent of annual sales for anti-trust violations. The competition commissioner, Neelie Kroes, has levied a record US$4.75 billion, in penalties this year in cartel cases against companies ranging from glass makers to brewers.

Air France-KLM Group, the biggest European airline, SAS Group, the owner of Scandinavian Airlines, and Cargolux Airlines International, the biggest European freight-only carrier, were also charged. They have two months to respond.

Lufthansa, the No. 2 airline in Europe, is working with the commission and has won conditional immunity.

SAS chief executive Mats Jansson said the company has a strict policy for compliance with competition rules and it is unfortunate if the policy has not been respected by all employees of SAS Cargo.

The commission typically opts for a penalty of about two percent to three percent of sales in cartel cases. Companies that have received the statements of objections may appeal decisions at European courts in Luxembourg.

The EU investigation involves both European and inter-Continental routes, with alleged illegal co-operation supposedly dating back to 2000.

Patrick Jeanne, a spokesman for Cargolux, confirmed that the Luxembourg-based company had received the charges. Michael Johnson of British Airways also provided confirmation, as did Soichi Yatsugi of Japan Air.

Air France-KLM will examine the European Commission's preliminary findings and will respond in due course.

Lufthansa has been working with the commission on the investigation since September 1, a spokeswoman, Stefanie Stotz, said.

AMR's American Airlines, which was among other carriers under investigation in the fuel-surcharge investigation, so far has not received a statement of objection, a spokeswoman, Anneliese Morris, said.

A spokesman for UPS, Norman Black, said that his company had not received one of the letters.

British Airways, the No. 3 carrier in Europe, was fined $300 million by a US court in August after pleading guilty to two criminal counts of conspiracy in setting extra charges on passenger and cargo flights to offset rising fuel expenses. The company was accused of fixing prices on air cargo as early as March 2002 and passenger flights starting in August 2004.

Virgin Atlantic Airways disclosed the passenger fare price-fixing, while Lufthansa reported participating in cargo price-setting with British Airways and Korean Air, the US Justice Department said in announcing plea agreements in August. Korean Air Lines said that it had not received any related document from the EU.
Source: cargonewsasia
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