Airlines lose cartel appeal

On 21 March, the Full Federal Court (FFC) upheld an appeal from the Australian Competition and Consumer Commission (ACCC) and found that Air New Zealand and Garuda Airlines of Indonesia were guilty of fixing surcharges for the carriage of air cargo from outside Australia to Australian airports in breach of the anti-cartel provisions of the Competition and Consumer Act 2010 (Act). The surcharges, the subject of the cartel arrangements, were charged to Australian importers who then passed them on to consumers.

The two airlines will face hefty fines.

The Australian Securities & Investments Commission (ASIC) prosecuted 15 airlines, including Qantas, for their involvement in the cartel going back a decade. So far 13 out of 15 airlines have paid almost AUD100 million in fines with the largest fine of AUD20 million levied against Qantas. The other airlines were Emirates, Singapore Airlines, British Airways, Air France, KLM, Malaysia, Thai, Japan Airlines, Korean Airlines, Cathay Pacific, Cargolux, and Martinair.

Significantly the FFC’s judgment held that even though the price-fixing conduct occurred outside Australia, as the relevant market for the purposes of the legislation was in Australia there had been a breach of the anti-cartel provisions of the Act. Subsequent amendments to the Act mean that it is no longer a requirement that the price fixing has to occur in a market in Australia and it is sufficient for it to occur anywhere in the world.

It is open to the two airlines to seek leave to appeal to the High Court of Australia (HCA). Applications for special leave are only granted in about 10% of cases, although interestingly in another competition case involving the aviation industry the HCA has just granted special leave to appeal to the ACCC in the Flight Centre case.

Post by Derek Luxford 

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