Eleven airlines fined in European cargo cartel investigation

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Eleven airlines have been hit with fines totalling almost €800 million ($1.1 billion) following the European Commission's investigation into anti-competitive behaviour in the air freight market.

Air France-KLM has been handed the largest fine, more than €310 million, comprising a penalty of €182 million for the French carrier and €127 million for its Dutch partner.

Dutch carrier Martinair, part of Air France-KLM, also received a €29.5 million fine.

Lufthansa and Swiss International Air Lines have escaped penalties after securing full immunity as a result of their 'whistleblowing' on the cartel.

British Airways has been fined €104 million, the third-largest individual penalty, followed by Cargolux, Singapore Airlines and SAS Group who were each fined between €70-80 million.

SAS was hit particularly hard, owing to its previous involvement in anti-competitive behaviour. The Commission says it increased SAS' fine by 50%.

Cathay Pacific and Japan Airlines were respectively ordered to pay €57 million and €35.7 million. Air Canada was fined €21 million while lesser fines of about €8 million were given to Qantas and LAN.

Five airlines attempted to secure a reduced fine, claiming an inability to pay, but have been turned down. Several airlines were, however, given leniency discounts of 10-20% for their limited involvement or assistance with the inquiry. The collective total penalty amounts to €799.4 million.

European competition commissioner Joaquin Almunia describes the participation of so many carriers in an anti-competitive cartel as "deplorable".

"With today's decision the Commission is sending a clear message that it will not tolerate cartel behaviour," he says.

Cartel members fixed prices for air freight over a six-year period between the end of 1999 and February 2006.

Initial activity centred on discussions of fuel surcharges, and this later developed with the introduction of a security surcharge.

"The aim of these contacts was to ensure that these surcharges were introduced by all the carriers involve and that increases, or decreases, of the surcharge levels were applied in full without exception," says the Commission.

Participating carriers also refused to pay commission on surcharges to freight forwarders. This meant the surcharges did not become subject to competition as a result of customer discounts. The Commission says these measures were illegal.

Despite fining the carriers for their cartel the Commission has dropped charges of collusion on other surcharges and freight rates, citing lack of evidence.

Eleven airlines, and a consultancy firm, have had charges dropped despite featuring on a formal statement of objections distributed by the Commission during its investigation.