US watchdog drops Air NZ cargo cartel investigation

Just months after the High Court in Auckland handed out record fines to airlines for alleged involvement in a cargo cartel, the United States Department of Justice has ceased its investigation into Air New Zealand.

The decision was announced today after what Air NZ said was five years of fighting in various courts and countries, and insisting it had done nothing wrong.

The cargo cartel investigation by the US department was one of several conducted into international airlines around the world.  The airlines, including Air NZ, were accused of forming a cargo cartel, by colluding to raise the price of freighting by adding fuel surcharges, and in some cases security surcharges, for more than nine years.

The New Zealand Commerce Commission saw 13 airlines in the High Court in 2008, accused of entering an illegal agreement around 1999 and imposing fuel surcharges from 2000 to 2006.  Charges also included regional price fixing agreements, and accusations that a security surcharge imposed after the September 11 terrorist attacks were a price fix.T

At the time, the total revenue from transporting cargo over the nine years was estimated to be about $2.9 billion.

Last year Air NZ became the 15th airline to face court proceedings from the Australian Competition and Consumer Commission (ACCC).

In April this year, the High Court imposed $7.6 million penalties on two international airlines - Cargolux International Airlines and British Airways.  The Commerce Commission settled with three airlines, including Qantas, the month before.  Qantas was still fined $6.5 million by the High Court, but was given a 50% discount for cooperating with the Commission.

The Commission also dropped its case against six Air NZ execs in April. 

The US Department of Justice Federal Prosecutors confirmed by letter that the investigation had ended and the airline was "no longer a subject or target of the ongoing grand jury investigation."

The airline said in its release that the announcement followed on from the result last November when it was not among the airlines fined by the European Commission and before that, confirmation from regulators in South Korea that Air New Zealand was not among airlines fined.

The airline said fines imposed to date exceeded $US1 billion.

Air New Zealand general counsel John Blair said the airline welcomed the announcement as a further step in demonstrating its innocence.

"This brings a closure not only for the airline but also, importantly, to a few individuals who have had to live for more than five years under the threat of criminal penalties, despite the airline’s confidence in their innocence."

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