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EU fines 11 airlines for fixing cargo prices

Nov. 10, 2010, Brussels, BEL - The European Union has fined 11 airlines, Air Canada among them, a total of almost US$1.1 billion for fixing prices on international cargo shipments, leading to higher prices for businesses to move their goods.


November 10, 2010
By The Associated Press

The European Commission, the EU's competition watchdog, said Tuesday that the carriers "co-ordinated their action on surcharges for fuel and security without discounts'' between December 1999 and
February 2006, when the EU's investigation stopped the cartel.

"Had it not been for the commission's intervention, the cartel would not have ended in 2006,'' said Competition Commissioner Joaquin Almunia.

Air France-KLM received the largest fine, euro310.1 million of the total of euro799.4 billion levied against all 11. Air France-KLM will also have to pay the euro29.5 million fine for Martinair, which it now owns.

Air Canada which took a $125-million provision related to the investigation in early 2008, said it was fined euro21 million, the equivalent of C$29.1 million.

Air Canada stock was off 18 cents, or 4.9 per cent, at $3.49 Tuesday afternoon on the Toronto Stock Exchange.

British Airways PLC was fined euro182.9 million, while Cathay Pacific, Cargolux, Japan Airlines, LAN Chile, SAS, Singapore Airlines and Qantas will also have to pay fines between euro8.2 million and euro79.9 million.

The commission dropped charges against 11 other carriers and one consultancy because it couldn't prove they participated in the cartel.

Lufthansa escaped a fine because it blew the whistle on the cartel.

All other carriers, except Singapore Airlines, had their fines reduced by between 15 per cent and 50 per cent for co-operating with the EU's investigation.

"It is deplorable that so many major airlines co-ordinated their pricing to the detriment of European businesses and European consumers'' Almunia said. "With today's decision the Commission is sending a clear message that it will not tolerate cartel behaviour.''

The U.S. Department of Justice has already charged 18 airlines and several executives in its investigation of the cargo cartel and imposed more than US$1.6 billion in fines.

The EU can't pursue companies or individuals with criminal charges, but Almunia didn't rule out that individual countries might impose criminal charges.