Airlines to Pay Criminal Cargo Price Fixing Fines

These major international airlines have agreed with the US Department of Justice (DOJ) to plead guilty and pay criminal fines totaling $504 million for participating in a multi-year conspiracy to fix prices for air cargo rates. All plea agreements are subject to court approval.

Specifically, the airlines and their fines are Air France-KLM (counted as two), $350 million; Cathay Pacific, $60 million; Martinair, $42 million; and SAS Cargo, $52 million. The DOJ notes that if the court imposes the $305 million fine on Air France-KLM it will be one of the largest criminal fines it has ever obtained.

In its discussion of the case, the DOJ said, “the airlines each engaged in a conspiracy to suppress and eliminate competition by fixing the cargo rates charged to customers for international air shipments. The charged conduct affected billions of dollars of consumer and other goods–including produce, clothing, electronics and medicines–shipped by these airlines and their competitors in the air cargo industry. The companies have each agreed to cooperate with the Department's ongoing investigation.”

These actions are part of an ongoing investigation by the DOJ. Other international carriers have previously pled guilty and paid fines as a result of the investigation. In April, Japan Airlines agreed to pay a $110 million fine for its price fixing. Prior to that, Qantas, British Airways and Korean Air had also pled guilty and paid fines. In reaction to the investigation, both Air Canada and El Al have set aside funds for possible settlements.

In discussing these actions, Kevin J. O'Connor, Associate Attorney General at the DOJ said, "Millions of American consumers and thousands of businesses–from the corner store to the biggest corporation–rely on the air transportation industry to provide the products we buy, sell, and use every day. This price-fixing conspiracy undermines our economy and harms the American people who, due to lack of true competition in this area, end up footing the bill.”

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