The Australian Competition and Consumer Commission has lodged a notice of appeal from the Federal Court’s decision to dismiss the ACCC’s proceedings against Air New Zealand Ltd (Air New Zealand) and PT Garuda Indonesia Ltd (Garuda) in relation to an alleged air cargo cartel.
In its proceedings, the ACCC alleged that Air New Zealand and Garuda contravened the Trade Practices Act 1974, now called the Competition and Consumer Act 2010 (the Act), by fixing the level of various surcharges to be applied to air cargo services supplied by a number of airlines between 2001 and 2006.
The trial judge concluded that although a number of the price fixing arrangements alleged by the ACCC were established which may have had an effect on prices in Australia, the cartel conduct did not take place in a “market in Australia” in which the airlines were competing, as was required by the Act at the time.
“The ACCC’s appeal is solely focused on the Court’s finding that there was no ‘market in Australia’,” ACCC Chairman Rod Sims said.
“Cartel conduct will always be a priority for the ACCC and we seek to take enforcement action in relation to all cartels that harm Australian consumers and businesses. For this reason, it is important that we seek clarity on whether the Act applies to the collusive arrangements identified by the Court,” Mr Sims said.
Mr Sims said “This issue is also important in the context of the Harper Review Panel’s recommendation that cartel provisions should only apply to cartel conduct affecting goods or services supplied or acquired “in Australian markets.”
Until the cartel provisions came into effect in July 2009, the price fixing provisions in the Act applied to contracts, agreements, or understandings that fixed prices between parties in competition in any “market in Australia”.
The cartel provisions apply to contracts, arrangements, or understandings between parties in competition with each other, including price fixing, but there is no requirement that this competition be in a market in Australia.
The Competition Policy Review (the Harper Review) Draft Report contains a recommendation that the cartel provisions should only apply to cartel conduct affecting goods or services supplied or acquired in “Australian markets”. The ACCC’s submission in response to the Draft Report expresses concern that this recommended change may risk undermining the efficacy of the cartel provisions by requiring proof of “market” beyond reasonable doubt in criminal cases.