Japan Airlines (JAL) has agreed to plead guilty and pay a fine of $110 million for its role in a cartel centered on air freight transportation.
The Tokyo-based carrier’s plea agreement with the US Department of Justice (DOJ) comes two years after the DOJ opened its investigation of international air cargo price-fixing, a probe that has already resulted in criminal fines to British Airways, Korean Air and Qantas Airways.
After “comprehensively considering the factors including the applicable laws and facts”, JAL has “reached the conclusion that entering into a plea agreement with the DOJ is the best resolution” under the circumstances, says the airline’s parent JAL Group.
The company set aside a reserve of nearly the entire amount when it announced its consolidated half-year results in November. It says it will “determinedly continue to expand and reinforce its current antitrust compliance program”.
According to the charges filed today in the US District Court for the District of Columbia, JAL engaged in a conspiracy in the USA and elsewhere to eliminate competition by fixing the rates for international shipments of cargo from about 1 April 2000 to February 2006.
During the time period covered by the felony charge, JAL was the largest carrier of cargo between the USA and Japan and earned almost $2 billion from its cargo flights to and from the two countries, says the DOJ in a statement.
Under the plea agreement, which is subject to court approval, JAL has agreed to cooperate with the department’s ongoing investigation.
“This price-fixing conspiracy inflicted a heavy toll on American businesses and consumers,” says Thomas Barnett, assistant attorney general in charge of the department’s antitrust division. “Japan Airlines is the fourth cargo carrier to admit to its involvement in this cartel and to agree to cooperate with an ongoing investigation.”
British Airways and Korean Air have already pleaded guilty for conspiring to fix cargo rates for international shipments, and been sentenced to pay fines of $300 million each.
The Qantas fine, by contrast, was only $61 million, partly because of its candour in admitting error promptly after its own internal audit. Equally important, Qantas probably obtained a “co-operation discount” for agreeing to assist investigators and provide evidence, if necessary, against other airlines, reported ATI sister publication Airline Business in its January 2008 issue.
Source: Air Transport Intelligence news