Japan Airlines admits role in air cargo cartel – ordered to pay $2.275 million

The High Court has ordered Japan Airlines Co Limited (JAL) to pay a $2.275 million penalty for breaches of the Commerce Act.

JAL has admitted liability in the Commerce Commission’s air cargo price fixing case for agreeing fuel and security surcharges in Europe, the United States and Asia for cargo flown to New Zealand.  It has also admitted liability for cargo flown from New Zealand to Asia.

The penalty, which had been recommended to the court by both the Commerce Commission and JAL as part of a pre-trial settlement, was imposed today by the High Court in Auckland.

The penalty included a 35% discount to recognise JAL’s admissions and ongoing cooperation with the Commission’s investigation. JAL also agreed to pay costs to the Commission.

“The Commission is pleased to have settled with another airline. Wherever possible, if a party is prepared to admit liability we will seek to resolve issues through settlement. This provides welcome certainty for the litigants and is significantly less costly and drawn-out for all parties,” said Commerce Commission General Counsel, Competition, Mary-Anne Borrowdale.

JAL was one of 13 airlines the Commission filed proceedings against in December 2008, alleging that the airlines colluded to impose fuel and security surcharges for air cargo shipments into and out of New Zealand. The conduct is alleged to have occurred over a period of more than six years.

JAL is the fourth airline to settle with the Commission in the case, following settlements with British Airways plc, Cargolux International Airlines S.A. and Qantas Airways Limited. The JAL penalty brings the amount obtained by the Commission in settlements to $16.375 million.

The Commission’s case against the defending airlines is scheduled to continue in the High Court in Auckland in March 2013, following a first-stage hearing that was held in August 2011.  At that hearing the Commerce Commission succeeded on the issue of whether there was a “market in New Zealand” for the inbound air cargo services that the Commission alleges were the subject of price fixing. This finding confirmed the High Court’s jurisdiction to hear the Commission’s case in full.

The defending airlines are now Air New Zealand Limited, Cathay Pacific Airways Limited, Emirates, Korean Air Lines Co Limited, Malaysian Airlines System Berhad Limited, Singapore Airlines Cargo Pte Limited and Singapore Airlines Limited, and Thai Airways International Public Company Limited.

In April 2011 the Commission discontinued its proceedings against PT Garuda Indonesia, United Airlines Incorporated and six Air New Zealand executives.