Qantas coughs to cargo conspiracy cartel

Thieves having fallen out, Qantas was the latest illegally-conspiring airline to dob in its freight price-fixing chums in exchange for a soft penalty deal.

In keeping with a behind-closed-doors practice of secretly working out penalties in advance, lawyers in Auckland High Court told Justice Chris Allan Qantas agreed to pay a $6.5 million penalty and $100,000 costs, for its active part in a six-year international cargo price-fixing cartel.

Commerce Commission Queen’s counsel Brendan Brown said the $6.5 million was at “the lower end” of the penalty the commission wanted.

The judge was told Qantas – which turned over more than $400 million a year from its New Zealand operation - was earlier hit with a $20 million price-fixing penalty in Australia.

Justice Allan reserved his decision but, if he follows the recent lead of Justice Judith Potter, he will simply rubberstamp the penalty agreed between Qantas and the commission.

Justice Potter earlier imposed penalties of $6 million and $1.6 million respectively on co-offenders Cargolux International Airlines and British Airways after they admitted their part in the 13-airline cargo pricing cartel.

Those penalties were fixed in secret out-of-court bargaining between the airlines and the commission at which British Airways agreed to co-operate in the prosecution of ten other airlines when the case against them begins in July next year.

Airlines made millions of extra dollars by agreeing with a plan led by German airline Lufthansa in 200l to impose fuel and security surcharges.

Secretly worked-out penalty deals in major white-collar prosecutions apparently got the approval of the then full High Court in 1994.

The court then had no objection to both sides reaching acceptable penalty “settlements” on the grounds it was in the public interest that proceedings be concluded quickly to avoid drawn-out and expensive hearings.

At the time attorney general John McGrath, now a knighted member of the Supreme Court, held the view that the prospect of getting a large penalty would result in businesses defending cases at great expense and clog the courts with long trials.

He figured it was better for the parties to cut a penalty deal provided the courts themselves were not involved in actual plea bargaining.

Airlines defending the latest allegations are Air New Zealand, Cathay Pacific, Emirates, Japan Airlines International, Korean Air Lines, Malaysian Airlines System Berhad, PT Garuda Indonesia, Singapore Airlines Cargo, Singapore Airlines and Thai Airways International.

The International Air Transport Association previously described the price-fixing arrangement as an illegal conspiracy in violation of competition laws.

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