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Wednesday, 10 November 2010

Cargolux fined. Again.

The European Commission has fined 11 airlines almost 800m euros (£690m) for fixing the price of air cargo between 1999 and 2006.  Had the Commission not intervened the "deplorable" cartel "would have continued", said EU Competition Commissioner Joaquin Almunia.  The illegal cartel had harmed both companies and consumers, he said.

British Airways was fined 104m euros, Air France-KLM 340m euros and Cargolux Airlines 79.9m euros.  The fines follow lengthy investigations by regulators in Europe, the US and Asia, dating back to 2006.  The EU said that the airlines "co-ordinated their action on surcharges for fuel and security without discounts", between early 1999 and 2006. "The carriers contacted each other so as to ensure that worldwide air freight carriers imposed a flat rate surcharge per kg for all shipments."

The Commission imposed the biggest fine - 340m euros - on Air France-KLM, which was formed from a merger in 2004 and which now owns Martinair, which was also fined.  "It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers," said Mr Almunia.  "With today's decision the Commission is sending a clear message that it will not tolerate cartel behaviour."

Airline: Fine (euros)
Air France-KLM (includes Martinair): 339.6m
British Airways: 104m
Cargolux: 79.9m [Click here to read about their earlier $124m fine in the USA]
Singapore Airlines: 74.8m
SAS: 70.2m
Cathay Pacific: 57.1m
Japan Airlines: 35.7m
Air Canada: 21m
Qantas: 8.9m
LAN Chile: 8.2m

BA said it had already made a £350m provision for any possible fines over the cargo price fixing.  A BA spokesman said the airline's fine fell "within the provision made by the company in its 2006/7 report and accounts".  The German carrier Lufthansa escaped a fine because it alerted the regulatory authorities to the cartel.  The maximum fine the Commission could have imposed on any single carrier was 10% of their 2009 turnover.

The US Department of Justice has already charged 18 airlines and several executives in its investigation of the cargo cartel and imposed more than $1.6bn (£997m) in fines.  The Commission's decision will have an impact on several pending legal actions by European companies against some of the airlines.  A group of firms, led by the Swedish telecoms group Ericsson and Dutch electronics giant Philips, are suing Air France-KLM and its Martinair subsidiary for 400m euros.


Anonymous said...

. . . and the relevance to Manston ?????

Mr. Earplugs said...

Freight is Manston's core business. Cargolux is Manston's largest freight customer, and the airport cites Cargolux as an indicator of its ability to attract, ahem, world class operators.

If you live under or near the flight path, you will have seen many Cargolux planes.

Anonymous said...

One might also wonder what impact these massive fines might have on the company expenses as a whole. At some stage they are going to want to claw this money back and if the competition is going to increase and they lose out will they start to look internally to reduce costs? Lets hope safety is not the first thing out of the window.

Anonymous said...

Safety!!! Someone has mentioned safety?

Lets be clear if TDC can ignore the advice of the Audit Commission on such matters then be very afraid or the big bad Jet will have your roof and house down?

They huffed and they puffed at TDC - get the picture? The public has!!!