High Court rules in ACCC's favour in air cargo cartel case

14 June 2017

The High Court of Australia today found that price fixing agreements entered into between Air New Zealand Ltd (Air NZ), PT Garuda Indonesia Ltd (Garuda), and other international airlines, which occurred between 2002 and 2006, breached Australia’s competition law.

“This is a significant win for the ACCC in the long-running, highly contested air cargo cartel proceedings,” ACCC Commissioner Sarah Court said.

The ACCC took action against Air NZ in 2009 and Garuda in 2010 alleging they colluded with other airlines on charges for fuel, security, insurance surcharges, and a customs fee, for the carriage of air freight from origin ports in Hong Kong (both airlines), Singapore (Air NZ) and Indonesia (Garuda) to destination ports in Australia.  Under the law as it then stood, the ACCC was required to establish that the conduct occurred in a ‘market in Australia’.

The High Court unanimously dismissed the appeals by each airline and held that all aspects of the market, including the presence of customers in Australia, need to be considered in deciding whether a market is ‘in Australia’.

“How a market is defined, including considerations of whether conduct occurs in Australia, are critical issues to the understanding and interpretation of Australian competition law,” Ms Court said.

“Today’s judgment sends a clear message that the ACCC is committed to pursuing cartel conduct that impacts on Australian business and consumers.”

The matters against Air NZ and Garuda will be remitted to the Federal Court for a hearing as to relief, including penalty.

Background

Between 2008 and 2010, the ACCC took proceedings against 15 international airlines. 13 airlines settled, with Federal Court judges imposing penalties totalling $98.5 million, as follows:

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

 

Competition regulators around the world have taken action in relation to the air cargo cartel, with fines or penalties ordered against various airlines in Europe, the United States, Korea, New Zealand, Canada, and India.

The airlines conduct occurred between 2002 and 2006 under the Trade Practices Act (1974), before the Competition and Consumer Act (2010) came into effect.

Release number: 
MR 88/17
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