ACCC: Air New Zealand fined $15M for price fixing scheme

By @chelean on
FILE PHOTO: An Air New Zealand Boeing Dreamliner 787 takes off from Auckland Airport in New Zealand,  September 20, 2017.
FILE PHOTO: An Air New Zealand Boeing Dreamliner 787 takes off from Auckland Airport in New Zealand, September 20, 2017. Reuters/Nigel Marple/File Photo

Air New Zealand has been fined $15 million for price fixing. The Federal Court penalised NZ’s flag carrier as part of the Australian Competition and Consumer Commission’s (ACCC) ongoing case against 15 of the world’s leading airlines.

The court found that Air NZ signed an illegal agreement with other airlines to fix the price of fuel and insurance charges on air freight services from Hong Kong. They also agreed to fix insurance and security charges from Singapore to various locations, including Australian airports, from 2002 to 2007.

Between 2008 and 2010, the ACCC commenced legal actions against 15 international airlines in Europe, the US, Korea, New Zealand, Canada and India. These included Air NZ. The Federal Court initially dismissed the regulator’s case against Air NZ and Garuda Indonesia in October 2014. The ACCC appealed the decision to the Full Court of the Federal Court, which upheld the ACCC’s appeal in March 2016. Both airlines appealed the decision to the High Court, which dismissed the appeals last year.

On Wednesday, the Federal Court ordered Air New Zealand to pay $11.5 in pecuniary penalty for price-fixing in relation to fuel surcharges imposed for cargo from Hong Kong to Australia. It also penalised the airline $3.5 million for price-fixing in relation to the insurance and security surcharge from Singapore to Australia.

ACCC Commissioner Sarah Court said illegal price fixing agreements gave perpetrators unfair advantage on the transport cost for goods flown into Australia. “This decision sends a strong warning to overseas and domestic operators that the ACCC can and will continue to defend competition and the rights of Australian customers and businesses by taking action against anti-competitive conduct,” she said.

“Our efforts over the last decade and these significant penalties make clear the ACCC’s commitment to tackling cartels.” The Federal Court has imposed a total of $113.5 million in penalties since the ACCC first launched investigation into the air cargo cartel in 2006.

The 14 carriers and their respective penalties are as follows:

  • Qantas: $20 million (December 2008)
  • British Airways: $5 million (December 2008)
  • Air France & KLM: $6 million (February 2009)
  • Cargolux: $5 million (February 2009)
  • Martinair: $5 million (February 2009)
  • Japan Airlines: $5.5 million (April 2011)
  • Korean Airlines: $5.5 million (November 2011)
  • Malaysia Airlines:$ 6 million (May 2012)
  • Emirates: $10 million (October 2012)
  • Cathay Pacific: $11.25 million (December 2012)
  • Singapore Airlines: $11.75 million (December 2012)
  • Thai Airways: $7.5 million (December 2012)
  • Air NZ: $15 million (June 2018)