Recent US and Australian developments suggest the global probe into air cargo price-fixing is accelerating. Three more airlines have agreed to plead guilty, pay fines and co-operate with Justice Department anti-trust investigators in the US criminal probe. Their pleas and sentences are subject to court approval, but Cargolux, Nippon Cargo and Asiana have agreed to pay fines of $119 million, $45 million, and $50 million respectively.
All three conceded they had met with rivals in the US and elsewhere to set cargo charges and then adhered to those charges between April 2000 and February 2006. Asiana also confessed to fixing US-South Koreanpassenger fares during the same period.
Guilty pleas have now been entered in 21 cases in the US, UK, and Australia, resulting in fines that top $1.8 billion. Three airline executives have also been sent to jail. More airlines face probes by the European Commission, UK, US, Australia and New Zealand.Switzerland and Brazil have also launched probes.
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Investigators have received a boost from a federal court decision in Australia, which rejected a claim by foreign airlines that Australia does not have authority to investigate overseas transactions.Singapore Airlines
and others had argued Australia's Competition and Consumer Commission was only empowered to investigate activity within Australia. They argued the ACCC's investigative demand was too burdensome because it required them to produce documents that span a six-year period, relate to several countries and may be in several languages. The airlines lost on all counts.
The most significant part of the ruling is that anti-trust investigators have the right to require disclosure of offshore transactions when they may have an in-country impact. This question about the extra-territorial reach of antitrust laws has been litigated in other countries, but this is the first known case in the air cargo probe. The same issue is currently pending in New Zealand's case against thirteen airlines, and the Australian ruling is likely to serve as a precedent.
If this reasoning is followed in other countries, it broadens airline exposure because any country could pursue them for antitrust violations affecting air cargo to or from that country, regardless of where the violation occurred.
After all the criminal investigations are completed, carriers still face civil class actions in at least the US and Australia, where shippers seek millions more in civil damages.In many of these cases, a guilty plea in a criminal case is prima facie proof of an anti-trust violation in the civil case.