Federal Court dismisses airline's appeal challenging ACCC investigation powers

2 October 2009

The Full Federal Court today unanimously dismissed an appeal by Singapore Airlines which sought to challenge the validity of compulsory investigation notices issued by the Australian Competition and Consumer Commission.

The notices, issued under section 155 of the Trade Practices Act in 2007 and 2008, required production of documents and information as part of the ACCC's ongoing investigation into alleged international air cargo cartel activity. Singapore Airlines challenged those notices in proceedings before Justice Middleton, who in April 2009 held that the notices were valid. The appeal against that decision was heard in August 2009.

The primary challenge to the notices was whether routes between two points wholly outside Australia could be within a "market in Australia". The Full Federal Court rejected that challenge and noted that "prices fixed for legs of a journey which take place wholly outside Australia may ultimately affect competition in a market in Australia".

ACCC Chairman, Mr Graeme Samuel, welcomed the decision: "This is a crucial decision for the ACCC. It confirms that the Act is able to reach cartels formed outside Australia affecting Australians. The Full Federal Court has also confirmed that the ACCC is fully able to investigate conduct occurring overseas. Here we are investigating a worldwide market for air cargo services. That market includes not only routes inbound to Australia and outbound from Australia but may well also include routes between two overseas destinations."

Proceedings were instituted on 22 December 2008 in the Federal Court in Sydney against Singapore Airlines. In those proceedings, the ACCC alleges that Singapore Airlines, between 2001 and 2005, made arrangements or arrived at understandings with other international air cargo carriers fixing the price of fuel surcharges and security surcharges applied to air cargo carried by Singapore Airlines and other airlines.

Proceedings were also commenced in the Federal Court on 30 April 2009 against Cathay Pacific Airways Limited, on 18 August 2009 against Emirates and on 2 September 2009 against PT Garuda Indonesia Ltd. The ACCC continues to investigate other airlines.

To date, proceedings in respect of this air cargo cartel have been concluded against six international airlines with the Federal Court imposing penalties totalling $41 million. It is noteworthy that none of those airlines contended that the Act did not apply to their conduct.

Release number: 
NR 244/09
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