Singapore Airlines cops $4.1M fine in latest air cargo cartel settlement

Friday 21st December 2012

Singapore Airlines Cargo has been fined $4.1 million for its role in colluding to fix prices for air cargo in the latest settlement with the Commerce Commission.

In the High Court in Auckland, Justice Chris Allan today ordered the airline to pay the third-biggest fine out the seven settlements to date, taking the running tally to $24.48 million. SIA Cargo, a subsidiary of Singapore Airlines, admitted liability for agreeing to fuel and security surcharges in Indonesia and Malaysia for cargo flown to New Zealand over a four-year period. The judge also awarded $260,000 in costs to the antitrust regulator.

"It is common ground that the defendant's conduct was at the serious end of the spectrum," the judgment said. "The surcharges comprised only part of the total charges to customers for air cargo services, but the agreements must inevitably have affected price competition and so impacted upon competitive dynamics in the relevant markets."

Justice Allan gave a 20 percent discount to the final penalty to recognise the admissions, and likened SIA Cargo's role in the cartel to that of Japan Airlines and Korean Air, which were fined $2.28 million and $3.5 million respectively.

"Importantly, SIA Cargo implemented a global competition law compliance programme in 2005," the judge said. "Since then it has continued to update its policy, as well as undertaking additional in person training and instituting web based training."

Other airlines to have settled with the regulator include British Airways, Cargolux Airlines, Emirates, and Qantas.

The alleged price-fixing has been the subject of antitrust process worldwide, with big settlements from multi-national airlines in Europe and the U.S. Some of the alleged agreements appear to have been in place since 2001.

In 2006, air freight forwarding services in and out of New Zealand generated $450 million in revenue.

The commission's case is scheduled to continue in the High Court, with Air New Zealand, Cathay Pacific Airways, Malaysian Airlines, and Thai Airways International defending the charges.

The regulator dropped proceedings against Garuda Indonesia, United Airlines and six Air New Zealand executives last year, and discontinued against two Qantas executives in February this year.

Last month, Cargolux lost a bid to throw out a compensation claim by a local flower exporter over the price-fixing cartel.

BusinessDesk.co.nz

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