British and Korean Air to Pay Big Cargo Price Fixing Fines

The US Department of Justice (DoJ) and Britain’s Office of Fair Trading conducted parallel investigations, which led to the filing of charges against British Airways (BA) and Korean Air. The fine levied by the US was $300 million each, with the Office of Fair Trading imposing an additional $246 million fine on BA.

The DoJ charged that between March 2002 and February 2006 BA engaged “in a conspiracy to suppress and eliminate competition by fixing the rates charged to customers for international air shipments of cargo, including shipments to and from the United States. Billions of dollars of consumer and other goods, including produce, clothing, electronics and medicines, are shipped by British Airways and its competitors in the air cargo industry.”

As for Korean Air, the DoJ charges that the carrier engaged “in a conspiracy to suppress and eliminate competition by fixing the rates charged to customers in the United Sates and elsewhere for international air cargo shipments from at least January 2000 to February 2006.”

Since two other airlines—Virgin Atlantic and Lufthansa—that could have been charged for price fixing have agreed to cooperate with the DoJ’s Antitrust Division in its investigations, they have been conditionally accepted into the Corporate Leniency Program. The program permits those who voluntarily disclose participation in an antitrust crime and fully cooperate in subsequent investigations to avoid criminal conviction and heavy fines.

“When British Airways. Korean Air and their co-conspirators got together and agreed to raise prices for passenger and air cargo fares, American consumers and business ended up picking up the tab for their illegal conduct,” says Acting Associate Attorney General William W. Mercer.

The DoJ notes that its investigation is ongoing and some reports indicate that American Airlines and United Airlines are among those being investigated.

Air Cargo Pricing Under Fire (October 2006)
Fuel Charges and Counter Charges (August 2006)
FedEx and UPS Drawn Into Price Fixing Probe (7/24/2006)
Probe looks into air cargo price fixing (March 2006)
Air cargo price fixing probe mounted (2/28/2006)

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