Price-fixing cartel

Commission confirms 80 million euro fine for Cargolux

Cargolux is reviewing the decision and will later decide whether to lodge an application for annulment with the General Court.
Cargolux is reviewing the decision and will later decide whether to lodge an application for annulment with the General Court.
Photo: Guy Jallay

(sth) – The European Commission on Friday re-adopted a cartel decision against 11 air cargo carriers. Cargolux is among the affected companies and will have to pay a fine of almost 80 million euros.

The decision imposes a total of 776,465,000 euros to the 11 air cargo carriers for operating a price-fixing cartel. Cargolux has been ordered to pay a total of 79,900,000 euros.

Commissioner Margrethe Vestager, in charge of competition policy, said: "Millions of businesses depend on air cargo services, which carry more than 20% of all EU imports and nearly 30% of EU exports.

"Working together in a cartel rather than competing to offer better services to customers does not fly with the Commission. Today's decision ensures that companies that were part of the air cargo cartel are sanctioned for their behaviour."

In a reaction to the decision by the Commission, Cargolux stated: "Cargolux acknowledges the decision issued today by the European Commission in the airfreight cartel case.

"This development did not come as a surprise: previous communications from the European Commission had indicated its intention to re-adopt a decision in this case. At this stage Cargolux is reviewing the decision and has not yet decided whether to lodge an application for annulment with the General Court."

Full immunity for Lufthansa

In November 2010, the Commission imposed fines of nearly €800 million on 11 air cargo carriers who participated in a price-fixing cartel, from December 1999 to February 2006, in the airfreight services market covering flights from, to and within the European Economic Area.

The cartel arrangements consisted of numerous contacts between airlines, at both bilateral and multilateral level to fix the level of fuel and security surcharges.

The companies fined next to Cargolux in 2010 were Air Canada, Air France-KLM, British Airways, Cathay Pacific Airways, Japan Airlines, LAN Chile, Martinair, Qantas, SAS and Singapore Airlines.

A 12th cartel member, Lufthansa, and its subsidiary, Swiss International Air Lines, received full immunity from fines.

The Commission's 2006 Leniency Notice allowed for this, as the two companies brought the cartel to the Commission's attention and provided valuable information.

Appeal on procedural errors

All but one of the companies (Qantas) subject to the 2010 decision challenged the decision before the EU's General Court.

In December 2015, the General Court annulled the Commission's decision against the cartel participants that appealed, concluding that there had been a procedural error. However, it did not rule on the existence of the cartel.

The Commission maintains that these air cargo carriers participated in a price-fixing cartel and is adopting a new decision and re-establishing the fines.

This new decision addresses the procedural error identified by the General Court while remaining identical in terms of the anticompetitive behaviours targeted by the Commission.

Highest fine for Air France

The fines were fixed at exactly the same level as in the 2010 decision for all the companies, except for Martinair.

In the 2010 decision, Martinair's fine had been capped at 10% of the company's total turnover in 2009. EU rules allow a maximum fine of 10% of the total turnover in the year preceding the adoption of the decision. Martinair's turnover is significantly lower in 2016 than in 2009. As a result, Martinair's fine has been lowered to reflect this.

The fines for the majority of carriers were also reduced for their cooperation with the Commission under the Leniency Notice.

Air France saw itself imposed the heaviest fine with 182,920.000 euros, LAN Chile had to pay the lowest fine at 8,220.000 euros.

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