NZ Commerce Commission impose penalties against carriers in cargo cartel case

Auckland's High Court imposed (05-Apr-2011) penalties against two carriers charged in a major cartel proceeding brought by the Commerce Commission. Cargolux International Airlines SA has been ordered to pay USD4.6 million (NZD6 million) in penalties and USD19,000 (NZD25,000) costs, while British Airways will pay USD1.2 million (NZD1.6 million) and USD768,000 (NZD100,000) in costs. The court has yet to impose a penalty on Qantas, though the carrier agreed to a USD5 million (NZD6.5 million) settlement, representing a 50% discount for cutting a deal. Justice Potter noted, in her Cargolux judgment, that the arrangements "were at the serious end of the spectrum" and that "the conduct would have adversely affected both price competition and the competitive dynamics in the air cargo services industry, with a corresponding reduction in efficiency incentives for members of the cartel." The Commission is currently preparing for the first stage of the price-fixing case, commencing in May-2011, at which the key issue is the meaning of a 'market in New Zealand' and whether air cargo services inbound to New Zealand are part of such a market. [more]

Commerce Commission: "The penalties reflect discounts for both airlines, to take account of their early admissions and their cooperation with the Commission's proceeding. BA has received a greater discount, because of its commitment to further cooperation as the case progresses, but in each case the Court has acknowledged the value to this agency of receiving assistance from the parties involved," Commission General Counsel of Enforcement, Mary-Anne Borrowdale, 05-Apr-2011.