Australian High Court backs ACCC in cargo cartel

An Garuda Indonesia Airbus A330-300 takes off. (Airbus)
The High Court has unanimously dismissed appeals from from Air New Zealand and Garuda Indonesia.

Australia’s High Court has handed the Australian Competition and Consumer Commission (ACCC) a victory in its long-running case against a number of airlines on price fixing on certain air freight charges.

In a judgement handed down on Wednesday, the High Court unanimously dismissed two appeals from a decision of the full court of the Federal Court of Australia from Air New Zealand and PT Garuda Indonesia.

“The principal issue on appeal was whether there was a market ‘in Australia’ for the air cargo services for which the airlines competed for the purposes of the Trade Practices Act 1974 (Cth),” the High Court said in a statement.

“The High Court held that the findings of fact made by the primary judge led to the conclusion that there was such a market.”

ACCC commissioner Sarah Court said it was a significant win for the ACCC in the long-running, highly contested air cargo cartel proceedings that concerned price fixing agreements entered into between Air New Zealand, Garuda and other international airlines between 2002 and 2006 that breached Australian competition laws.

The ACCC alleged Air New Zealand in 2009 and Garuda in 2010 colluded with other airlines on charges for fuel, security, insurance surcharges, and a customs fee, for the carriage of air freight from origin ports in Hong Kong (both airlines), Singapore (Air NZ) and Indonesia (Garuda) to destination ports in Australia.

Under the Trade Practices Act as it then stood, the ACCC was required to establish that the conduct occurred in a “market in Australia”.

The Federal Court initially found that the market for the air cargo services for which the airlines competed was not in Australia.

However the ACCC appealed to the full court of the Federal Court. And the airlines then sought leave to appeal to the High Court.

“How a market is defined, including considerations of whether conduct occurs in Australia, are critical issues to the understanding and interpretation of Australian competition law,” ACCC commissioner Court said in a statement.

“Today’s judgment sends a clear message that the ACCC is committed to pursuing cartel conduct that impacts on Australian business and consumers.

The ACCC said matters against Air New Zealand and Garuda would be “remitted to the Federal Court for a hearing as to relief, including penalty”.

The ACCC commenced court proceedings against 15 international airlines between 2008 and 2010. So far, 13 airlines have been fined a total of $98.5 million.

No
Airline
Date of Court Order
Penalty

1

Qantas

December 2008

$20m

2

British Airways 

December 2008

$5m

3

Air France and KLM 

February 2009

$6m

4

Cargolux 

February 2009

$5m

5

Martinair 

February 2009

$5m

6

Japan Airlines 

April 2011

$5m

7

Korean Air Lines

November 2011

$5m

8

Malaysia Airlines

May 2012

$6m

9

Emirates

October 2012

$10m

10

Cathay Pacific

December 2012

$11.25m

11

Singapore 

December 2012

$11.75m

12

Thai Airways 

December 2012

$7.5m

Source: ACCC

Comments

  1. James says

    Where has this $98.5 million gone? I understand that it is not all in one go, but that is a heck of an amount of $$$ paid to whom? I’m sure it could have paid for a few things around…..

  2. Peter says

    Paid as a fine to the Commonwealth, James, as all commonwealth penalties the money is remitted to the Consolidated Revenue Fund.

Leave a Reply

Your email address will not be published. Required fields are marked *