Emirates fined $10m for cartel

Release date: 13/10/2012

Emirates has been penalised $10 million for its part in a global air-freight cartel, taking the total amount airlines - including Qantas - have been fined in Australia for the illegal activity to $68 million.

Matt O'Sullivan, Sydney Morning Herald

In the latest chapter in the unravelling of the cartel, the Federal Court in Sydney yesterday ordered Emirates to pay a total of $10 million in penalties for fixing fuel and other surcharges. So far, 10 airlines have settled cases brought against them by the competition regulator.

Australian Competition and Consumer Commission chairman Rod Sims said the latest penalty sent a ''strong message'' that regulators and the courts would not ''tolerate any business - regardless of size or country of origin - engaging in cartel conduct''.

Emirates was fined $7 million for fixing fuel prices, a security surcharge and a customs fee on air freight carried from Indonesia to Australia and other countries between October 2001 and May 2006. It was also penalised $3 million for trying to fix rates with DAS Air Cargo for the supply of air freight from Australia.

It was ordered to pay $500,000 towards the ACCC's costs.

Emirates is the ACCC's second-biggest scalp following a three-year investigation that was the largest in its history.

The other airlines to be fined in Australia since 2008 include Air France-KLM ($6 million), Japan Airlines ($5.5 million) and British Airways ($5 million).

Last year Qantas closed the door on a dark period in its corporate history after reaching a settlement in New Zealand to pay its fifth fine for illegally fixing prices in its freight operations.

It took the total penalties it had copped worldwide to more than $105 million, which includes a $20 million fine in Australia for illegally ramping up freight charges in concert with other airlines.

The episode not only dented Qantas' earnings but resulted in one of its American freight executives, Bruce McCaffrey, serving six months' jail in the US.

The global cartel originated in 1996, when at least 17 airlines, including Qantas, introduced freight levies on air cargo to counter rising jet fuel costs.

The Australian regulator has legal action under way against Singapore Airlines, Cathay Pacific, Air New Zealand and Thai Airways. The cases are due to be heard in the Federal Court in Sydney from October 22.

The ACCC also has action proceeding against Garuda Indonesia following a High Court ruling last month that the flag carrier was not eligible for foreign state immunity.

Meanwhile, Qantas has been fined $US100,000 in the US for failing to disclose baggage fees.

The US Department of Transportation said the fine had been imposed on Qantas for violating a new rule requiring airlines and travel agents to tell passengers that they may have to pay baggage fees. The department directed Qantas to ''cease and desist from further violations''.

Click here to read this article on the Sydney Morning Herald website.

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