Thai Airways to pay $7.5 million in penalties for price fixing

17 December 2012

The Federal Court in Sydney has ordered Thai Airways International Public Company to pay $7.5 million in penalties for engaging in cartel conduct in breach of the Trade Practices Act 1974 (now the Competition and Consumer Act 2010).

“The court has now ordered total penalties in Australia of almost $100 million. The $7.5 million penalties ordered against Thai Airways have contributed to the highest total penalties resulting from a single ACCC investigation,” ACCC chairman Rod Sims said.

“Thai Airways is the thirteenth international airline to have admitted to engaging in cartel conduct in Australia and to have penalties ordered against it.

“This judgement, plus other recent institution of proceedings alleging cartel conduct against Renegade Gas Pty Ltd and Speed-E-Gas (NSW) Ltd in August and then the Yazaki Corporation last week sends a strong signal to the business community that cartel conduct will not be tolerated.”

The Australian Competition and Consumer Commission’s action against Thai Airways formed part of larger cartel proceedings taken against a number of international airlines. The order against the Thai airline comes just a week after the Court ordered

Singapore Airlines Cargo Pte Ltd and Cathay Pacific Airways Ltd to pay a total of $23 million in penalties in the same proceedings.

Delivering the judgement, Justice Katzmann said “Thai accepts that the contraventions were very serious. This was deliberate, systematic conduct involving senior staff at the Thai station in Indonesia. For the understandings to be effective they required the participation of all players in the market including Thai.”

The ACCC commenced proceedings against Thai airlines in 2009, alleging that they engaged in cartel conduct related to fuel and other surcharges. As part of the settlement, Thai Airways has admitted to reaching and giving effect to price fixing understandings related to a fuel surcharge, security surcharge and customs fee for the carriage of freight from Indonesia to Australia.

The Court ordered Thai Airways to pay $7.5 million in penalties and a further $500,000 in costs, bringing the total penalties ordered in the entire proceedings to $98.5 million. It also issued an injunction restraining the airline from engaging in similar conduct for a period of five years. Injunctions provide an additional deterrent and reassurance that the likelihood of repeat conduct is reduced as reoffending would constitute both a breach of the Act and contempt of court which carries significant penalties.

The ACCC’s trial against air New Zealand and Garuda Indonesia continues before Justice Perram in the Federal Court in Sydney.

More information about cartels is available on the ACCC cartel’s web page: www.accc.gov.au/cartels

Release number: 
NR 267/12
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