ACCC appeal upheld in air cargo case

21 March 2016

The Full Court of the Federal Court today, by majority, upheld an appeal by the Australian Competition and Consumer Commission in relation to air cargo cartel allegations.

The Full Court found that price fixing conduct engaged in by PT Garuda Indonesia Ltd (Garuda) and Air New Zealand Ltd (Air NZ) relating to the imposition of agreed surcharges on the carriage of air cargo from ports outside Australia to destinations within Australia took place in a “market in Australia”, and consequently breached Australia’s price fixing laws.

The majority of the Full Court held that “all aspects of the market are relevant in determining whether it is in Australia,” and that “the presence of importers (customers) in Australia is not…… irrelevant to the determination of whether the market is in Australia.”

“The air cargo case is a very significant one for the ACCC, as it involved a substantial number of airlines engaging in price fixing conduct around the world. To date, 13 airlines have paid penalties totalling approximately $98 million for making and giving effect to price fixing agreements relating to the imposition of air cargo surcharges on cargo sent to Australia,” ACCC Chairman Rod Sims said.

“Although it is no longer a requirement of our cartel laws that it be established that price fixing occurred in a market in Australia, this decision is significant because it confirms the ACCC’s view that the conduct by the airlines in fixing air cargo surcharges to be paid by Australian importers and ultimately passed on to Australian consumers, were caught by Australian competition laws.”

The matters against both Air NZ and Garuda have been remitted to the Federal Court to determine the relief to be granted, including declarations, injunctions and penalties. 

 

Background

The ACCC has taken proceedings against fifteen international airlines, including Garuda (2 September 2009) and Air New Zealand (17 May 2010), alleging the airlines had engaged in price fixing in relation to surcharges for the carriage of air cargo from origin ports outside Australia to destination ports within Australia. Most airlines (13 out of 15) have settled with the ACCC and penalties totalling $98.5m have been imposed by the Federal Court against those settling airlines (see table below).

On 31 October 2014 Justice Perram dismissed the ACCC’s proceedings against Garuda and Air New Zealand on the basis that the conduct which he found otherwise would have contravened the Trade Practices Act 1974 (Cth) (now called the Competition and Consumer Act 2010) did not do so as it did not occur in a ‘market in Australia’ as was required  by the Act at the time of the conduct.

The ACCC appealed the decision to the Full Court of the Federal Court. Garuda and Air New Zealand also lodged Notices of Contention against the decision in relation to whether the conduct occurred in a ‘market in Australia’, the agreements that were found to have been reached, as well as a broad range of other issues.

The appeals were heard in August 2015 before Justices’ Dowsett, Yates and Edelman.

 

Table of Court ordered penalties with settling airlines.

 

Carrier

Date of court order

Penalty

Qantas

Dec 2008

$20m

British Airways

Dec 2008

$5m

Air France & KLM

Feb 2009

$6m

Cargolux

Feb 2009

$5m

Martinair

Feb 2009

$5m

Japan Airlines

April 2011

$5.5m

Korean Air Lines

Nov 2011

$5.5m

Malaysian

May 2012

$6m

Emirates

Oct 2012

$10m

Cathay Pacific

Dec 2012

$11.25m

Singapore

Dec 2012

$11.75m

Thai Airways

Dec 2012

$7.5m

 

TOTAL

$98.5m

 

Release number: 
MR 32/16
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