ComCom drops cartel case against Air NZ execs

The Commerce Commission today dropped its case against PT Garuda Indonesia and six Air New Zealand executives ahead of the first hearing of the air cargo cartel case next month.

“Discontinuing against these parties is part of the commission’s overall strategy to streamline and focus the case on those airlines with large turnover in New Zealand markets,” said Commerce Commission general counsel of enforcement, Mary-Anne Borrowdale.

The commission’s case alleging freighting cargo price fixing continues against Air New Zealand, Cathay Pacific, Emirates, Japan Airlines International, Korean Air Lines, Malaysian Airlines, Singapore Airlines and Thai Airways.

In December 2008 the commission began proceedings against 13 international airlines and eight airline executives, alleging the airlines colluded to raise the price of freighting cargo by imposing fuel surcharges on cargo shipments into and out of New Zealand.

The conduct is alleged to have occurred over a period of more than seven years.

On April 5 the High Court imposed penalties against British Airways and Cargolux International Airlines S.A.

Cargolux was ordered to pay penalties of $6 million and BA was ordered to pay penalties of $1.6 million.

In both these judgments, the court noted that it was making no findings in respect of the airlines that continue to defend the proceedings.

The commission has also resolved its proceedings against Qantas, which admits its participation in the cartel.

At a hearing held in the High Court at Auckland earlier this month, the commission and Qantas recommended that the court impose a penalty of $6.5million. The court’s
judgment is pending.

The first stage of the cartel case starts on May 11 in the High Court at Auckland and concerns whether air cargo services inbound to New Zealand are part of a ‘market in New Zealand’ and the commission can take action against them.

The remainder of the case is scheduled to begin in July 2012 and will deal with the commission’s allegations of price fixing.