EU Reinstates $835M Fine for Air Cargo Cartel

(CN) – The European Commission on Friday reinstated an $834 million antitrust fine against 12 air cargo carriers, saying it has addressed procedural issues that led an EU court to annul the fine in 2015.

In 2010 – after years of unannounced inspections and a tip-off from Lufthansa Cargo – the commission found “a single and continuous” infringement of EU competition rules relating to fuel and security fees charged by a number of air cargo carriers, including Air Canada, Air France-KLM, British Airways, Cathay Pacific, Japan Airlines and Qantas.

The commission fined the carriers a combined $864 million except Lufthansa, which was granted immunity for the tip-off.

But the carriers appealed, arguing that the commission’s decision was so vague they couldn’t tell the nature and scope of the infringements they were accused of. Specifically, the decision mentioned four violations on different routes and at different times by different carriers, while the commission relied on grounds that the violation was single, worldwide, continuous, and included all routes.

In December 2015, the European General Court agreed with the carriers and overturned the commission’s fine. The Luxembourg-based court noted that both the principle of judicial protection and the fact that national courts rely on – and are bound to follow – commission decisions mean the decisions must be clear, precise and unambiguous.

The court also found that the commission’s grounds for the fine were inconsistent since it was “difficult to reconcile” a single cartel covering all the routes mentioned by the commission.

Undaunted, and noting the court did not rule on the existence of a cartel, the commission on Friday reinstated the fines. The regulatory body said it had addressed “the procedural error identified by the general court” but that its new decision is “identical in terms of the anticompetitive behaviors targeted by the commission.”

Competition commissioner Margrethe Vestager said in a statement that reinstating the fines was necessary to sanction the air carriers for their behavior.

“Millions of businesses depend on air cargo services, which carry more than 20 percent of all EU imports and nearly 30 percent of EU exports,” she said. “Working together in a cartel rather than competing to offer better services to customers does not fly with the commission.”

All the carriers save Singapore Airlines saw their fines reduced by varying degrees due to their cooperation during the commission’s investigation.

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