Update on investigations into the air cargo industry
The United States Department of Justice (DoJ) has imposed criminal fines of over AUD$520 million on Air France, KLM Royal Dutch Airlines, Martinair Holland and SAS Cargo for participating in an international air cargo cartel. To date, British Airways, Korean Airlines, Japan Airlines and Qantas and a Qantas executive have all pleaded guilty to the DoJ to involvement in the cartel. In addition, Thai Airways is reportedly prepared to plead guilty to price fixing and pay fines of over AUD$300 million to settle charges brought against them by the European Commission.
In addition, the New Zealand Commerce Commission has filed criminal charges against Singapore Airlines, Cathay Pacific and Aerolineas Argentinas for failing to provide information sought as part of its investigation into the air cargo industry. The companies could each be fined up to AUD$24 000 if found guilty.
The European Commission (EC) has implemented a new fast track settlement procedure that allows cartel participants to have their fines reduced by up to 10 per cent if they admit to their involvement. The EC’s Competition Commissioner Neelie Kroes has stated that 'the procedure will reinforce deterrence by assisting the EC to deal more quickly with cartel cases, freeing up resources to open new investigations.' In addition, the offending companies will have little scope for appealing against EC decisions, reducing litigation expense and time.
Recently tabled proposed amendments to Israel’s Antitrust Law have called for a new section of competition law to specifically target oligopolistic markets. Currently, a declaration of the existence of a ‘concentration group’ can be made by the anti-trust commissioner, which has the same provisions as a monopoly under Antitrust Law. The proposed amendments would redefine the existence of a 'competition group' as one in which more than half the assets or services in a market are controlled by only a few players, competition between those companies is limited and steps are available to bolster competition in the market, and the anti-trust commissioner may impose behavioural or structural remedies on those companies.
The EC, along with counterparts from relevant national competition agencies, has conducted dawn raids on the offices of traders and distributors of cereals and other agricultural products for human consumption and animal feed in two member states. Two United States companies, Cargill and Bunge, have confirmed their Italian offices were inspected. The EC has also imposed fines totalling AUD$8 million on a number of aluminium fluoride producers, including Fluorsid and Minmet, for participation in a price-fixing cartel in 2000. Aluminium fluoride is used to lower the smelting temperature of aluminium, reducing energy consumption in the process.
In addition, Germany's Federal Cartel Office (the BundesKartellamt) has imposed fines of over A$16m on nine cosmetics and perfume manufacturers and 13 company executives. The companies include German subsidiaries of Chanel, Clarins, Coty Prestige Lancaster, Estée Lauder, L'Oréal, LVMH Parfums & Cosmetics, Shiseido and YSL Beauté. The BundesKartellamt has alleged the companies exchanged information from 1995 on sales, pricing, advertising campaigns and product launches. In 2006 the French Competition Council had fined these companies AUD$75 million for allegedly colluding with vendors to set the price of perfumes and cosmetics between 1997–2000.
Meanwhile in the United Kingdom six companies have reached an early resolution agreement with the Office of Fair Trading in which they have admitted to participating in a tobacco price fixing cartel and agreed to reduced penalties of AUD$271 million. The OFT alleged that two tobacco manufacturers and 11 retailers colluded to set the retail prices for tobacco products. Asda, First Quench and Gallaher are among those that have settled, with investigations into Imperial Tobacco, Morrisons, Safeway and Tesco continuing.
