Court orders British Airways PLC to pay $5 million for price fixing

11 December 2008

The Federal Court in Sydney has ordered British Airways PLC to pay $5 million in pecuniary penalties for breaching the price fixing provisions of the Trade Practices Act 1974.

The Australian Competition and Consumer Commission instituted proceedings on 28 October 2008 alleging British Airways reached an understanding with Lufthansa Cargo Aktiengesellschaft (Lufthansa) in relation to the imposition of fuel surcharges on some of its international air cargo services between 2002 and early 2006.

British Airways admitted it arrived at an illegal understanding with Lufthansa providing for the exchange of information relating to the proposed application by each of them of a fuel surcharge on some of their international air cargo services and, that in arriving at and giving effect to that understanding, it had the purpose and effect of fixing a component of the price (i.e. the fuel surcharge) for the supply of international air cargo services.

"This case should send a very strong message to cartelists that the ACCC will not relent in its pursuit and the bringing to account of those who engage in illegal behaviour," ACCC Chairman, Mr Graeme Samuel, said today.

"There are no safe havens for illegal cartel conduct.

"This action and the recent introduction of the Bill criminalising cartel conduct will create a much stronger disincentive for cartels forming and continuing. It will also step up the pressure on cartel members to take advantage of the ACCC's immunity and cooperation policies to report their fellow cartel members before they find themselves facing possible time behind bars," Mr Samuel said.

The penalty handed down against British Airways reflects the serious nature of the cartel contraventions and its share of the Australian segment of the market. However, they also take into account the level of cooperation British Airways provided to the ACCC's investigations.

"British Airways has supplied significant information as to its own role and that of others which is continuing to assist the ACCC's ongoing investigations into the conduct of other airlines," Mr Samuel said.

Justice Lindgren also made orders restraining British Airways from engaging in similar conduct for a period of five years, and pay $200,000 contribution towards the ACCC's costs.

Justice Lindgren indicated he would publish his reasons in January 2009.

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Release number: 
MR 352/08
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