Airlines appeal European Commission's cartel fines of €776m

26 / 07 / 2017

The European Commission (EC) faces a further appeal by eleven airlines over its March 2017 decision to re-adopt a previous ruling and to impose fines totalling more than €776m on the carriers for operating a price-fixing cargo cartel between 1999 and 2006.

KLM, British Airways, Lufthansa and eight other carriers have asked that the European Union’s (EU) General Court annul the March decision and have also requested that the fines be reduced or eliminated, according to a series of notices in the EU’s Official Journal.

A spokesperson for the European Union's executive branch in Brussels said: "The Commission will defend its decision in court."

The Commission’s original decision had been annulled by the European Union’s General Court on procedural grounds.

Background

In November 2010, the EC imposed fines of nearly €800m on 11 air cargo carriers that had participated in an alleged price-fixing cartel between December 1999 and February 2006.

The carriers had all been operating in the airfreight services market covering flights from, to and within the European Economic Area.

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

The companies fined in 2010 were Air Canada, Air France-KLM, British Airways, Cargolux, 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.

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

And, in December 2015, the General Court annulled the Commission’s decision against the 11 cartel participants that appealed, concluding that there had been a procedural error. However, it did not rule on the existence of the cartel.

The EC maintains that these air cargo carriers did indeed participate in a price-fixing cartel and has now adopted a new decision, re-establishing the fines.