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Three Airlines Are Paying Price Fixing Fines

Jan. 29, 2009
With continuing worldwide governmental investigations of airline pricing, three carriers have reached plea agreements with the US Department of Justice to pay fines for price fixing

With continuing worldwide governmental investigations of airline pricing, three carriers have reached plea agreements with the US Department of Justice to pay fines for price fixing.

Chile’s LAN Cargo and its Brazilian subsidy, Aerolinhas Brasileiras, will pay a single criminal fine of $109 million for their roles in a conspiracy to fix prices. At the same time, Israel’s El Al has agreed to pay a fine of $15.7 million for its part in a price fixing conspiracy. The three airlines have agreed to plead guilty to the charges with the agreements subject to court approval.

To go into the legal language of the Department of Justice, specific charges are: participating in meetings, conversations and communications in the United States and elsewhere to discuss the cargo rates to be charged on certain routes to and from the United States; agreeing, during those meetings, conversations and communications on certain components of the cargo rates to charge for shipments on certain routes to and from the United States; levying cargo rates in the United States and elsewhere in accordance with the agreements reached; and engaging in meetings, conversations and communications in the United States and elsewhere for the purpose of monitoring and enforcing adherence to the agreed-upon cargo rates.

Elsewhere in mid-December New Zealand’s Commerce Commission “filed proceedings” against “13 airlines and seven airline staff, including senior executives, for extensive and long-term cartel activity in the air cargo market.”

Allegations against the airlines are that for seven years they colluded to raise cargo freight rates through fuel surcharges. The Commission points out that some of the airlines were cooperating and may reach an early resolution. The Commission also notes that though there could be as many as 60 airlines worldwide that might be involved in such proceedings, it is only focusing on those that have the greatest impact on New Zealand.

The 13 airlines are: Air New Zealand; British Airways; Cargolux International; Cathay Pacific; Emirates; PT Garuda Indonesia; Japan Airlines; Korean Airlines; Malaysian Airline System; Qantas; Singapore Airlines Cargo and Singapore Airlines; Thai Airways; and United Airlines.

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