Qantas hit with $12m cartel fine

The European Commission has fined Qantas and 10 other airlines $1 billion for fixing air cargo prices.

The Commission has found Qantas, British Airways, Air France, Japan Airlines and seven other carriers fixed the price of air cargo between 1999 and 2006.

The Commission says the “deplorable” cartel would have continued had it not intervened.

Of the $1 billion fine, Qantas will shoulder the second lowest share of $12 million.

European Competition commissioner Joaquin Almunia says the economic climate at the time is no excuse for collusion.

“The fact that fuel prices were increasing, or that security costs rose after the 2001 terrorist attacks, is not an acceptable reason to stop competing against each other,” he said.

“If companies’ costs increase, it’s normal that their prices also increase. But companies cannot collude to fix the price for customers.

“Let me state clearly that the Commission supports the consolidation of the airline industry provided that it does not create monopolies or excessive market power.

“We have approved numerous mergers and alliances in the sector. But the existence of an alliance agreement cannot give a blank cheque for naked price coordination among the members of this alliance.”

A Qantas spokesman says the airline has received official advice on the fine and is now examining the European Commission’s decision.

The airline says it will make a further statement later today.

The fines follow lengthy investigations by regulators in Europe, the US and Asia.

The EU says the airlines coordinated their action on surcharges for fuel and security without discounts.

The investigation began after German airline Lufthansa blew the whistle on the behaviour.

Lufthansa was involved in the cartel, but because they came forward they have escaped a fine.

It is not the first time Qantas has been hit for anti-competitive behaviour. In 2007 it was fined $US40 million for price fixing in the North American Air Cargo market.

The head of the competition watchdog says the $1 billion fine is a reminder of the price of collusion.

The ACCC has already fined Qantas $20 million after it pursued it and several other airlines over the same cartel.

ACCC chairman Graeme Samuel says since July last year executives who engage in cartels are at risk of jail time, and he is amazed executives continue to undertake such practices.

“They’ll have to take into account now the fact that if they engage in any serious hardcore cartel activity, they now face the prospect of going to jail for up to 10 years,” he said.

“I suspect that’s going to be far more important than any court orders restraining them.”

What the airlines were fined

Air France-KLM $425.6 million; Martinair $40.5m; British Airways $142.7m; Cargolux $109.7m; Singapore Airlines $102.7m; SAS group $96.3m; Cathay Pacific $78.4m; Japan Airlines $49m; Air Canada $28.8m; Qantas $12.2m; LAN Chile $11.2m.

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