The Commerce Commission has reached a settlement with an international freight forwarding company accused of anti-competitive conduct in the freight forwarding market.The High Court at Auckland yesterday approved the resolution reached between the commiss
The Commerce Commission has reached a settlement with an international freight forwarding company accused of anti-competitive conduct in the freight forwarding market.
The High Court at Auckland yesterday approved the resolution reached between the commission and EGL Inc, and ordered EGL to pay a penalty of $1.15 million and the commission’s litigation costs of $50,000.
EGL admitted breaching the Commerce Act by participating in a surcharge agreement (UK NES surcharge) together with other freight forwarders.
The surcharge related to security measures at airports for exports from the United Kingdom and had the effect of controlling and maintaining prices for the supply of freight forwarding services from the United Kingdom to New Zealand.
In 2007 the commission began investigating alleged collusion by a number of multi-national companies involved in the supply of international freight forwarding services to the New Zealand market.
This followed a confidential application for leniency by one of the companies involved in the conduct.
In his judgment, Justice Rodney Hansen regarded EGL’s conduct as “hard core cartel” behaviour that “enabled all members of the cartel to impose a surcharge without the need to consider their competitors’ likely response”.
He said that the illegal conduct “affected both price competition and the competitive dynamics in the freight forwarding industry and impacted on the efficiency of cartel members”.
Commerce Commission general manager of enforcement Kate Morrison said, “Had the cartel agreement not existed, market forces would have been left to determine the level of any surcharges customers would be prepared to accept.”
Ms Morrison said, “We are pleased that EGL acknowledged liability at the first available opportunity and cooperated throughout the investigation.
These important factors were reflected in the agreed penalty that the court has endorsed.”
In September 2010 the commission announced it had reached agreed settlements with two of the parties, EGL and Geologistics International (Bermuda) Limited.
Further details of the settlement with Geologistics International (Bermuda) Limited will be announced once it has been approved by the High Court.
