European Commission re-imposes cartel fine against 10 carriers

It appears March is turn-back-the-clock month in the European air cargo industry. Just a week after a European Union court today reversed an earlier decision preventing UPS from purchasing TNT Airways in 2013 on antitrust grounds, the European Commission (EC) has reversed a December 2015 decision by the General Court to annul the 2010 cartel case that had levied steep fines against 11 carriers for price-fixing.

The reversal by the EC re-instates fines of €776 million to be applied to 10 carriers – Air Canada, Air France-KLM, British Airways, Cargolux, Cathay Pacific Airways, Japan Airlines, LAN Chile, Martinair, SAS and Singapore Airlines. An 11th carrier involved in the case, Qantas, had accepted the verdict and was not part of the challenge to the 2010 ruling.

Lufthansa, and subsidiary Swiss International, had brought the cartel to the attention of the commission and received full immunity from the case.

“Millions of businesses depend on air cargo services, which carry more than 20 percent of all E.U. imports and nearly 30 percent of E.U. exports,” said Commissioner Margrethe Vestager, who is head of the EC’s competition policy. “Working together in a cartel rather than competing to offer better services to customers does not fly with the Commission. Today’s decision ensures that companies that were part of the air cargo cartel are sanctioned for their behavior.”

In response to the reversal, Cargolux released a statement, saying that it the commission’s decision “did not come as a surprise: previous communications from the European Commission had indicated its intention to re-adopt a decision in this case.” For its role in the cartel, Cargolux had been fined for €79.9 million in 2010.

“At this stage Cargolux is reviewing the decision and has not yet decided whether to lodge an application for annulment with the General Court,” said the Luxembourg-based all-cargo carrier. Cargolux, however, did add that it “welcomes the recognition by the Commission that no undertaking should be put in a worse position simply as a result of the errors by the Commission, which were the basis for the annulment of the Commission’s 2010 decision.”