Airlines’ fixed prixing conspiracy
In June 2008, four major airlines, including Air France-KLM, Martinair and Cathay Pacific Airways, have agreed to pay US criminal fines totalling 504 million dollars to settle charges they conspired to fix air cargo prices. Air France-KLM will take the largest fine among these four airlines charged, totalling 350 million dollars. Officials said the penalty was the second highest ever applied in a US criminal antitrust investigation.
Now a year later, we hear some more details and the full scope of this investigation. Yesterday the US government announced that a Dutch executive of Martinair pleaded guilty agreed to serve 8 months in jail and pay a $20,000 fine. To date, 15 airlines and four executives have pleaded guilty or agreed to plead guilty in the ongoing investigation into price fixing in the air transportation industry, the Justice Department said.
The companies have paid or agreed to pay criminal fines totaling more than $1.6 billion and three executives have been given jail sentences. Companies as British Airways, Korean Airlines, Qantas Airways, Japan Airlines, Martinair Holland, Cathay Pacific Airways, SAS Cargo, Societe Air France, KLM, LAN Cargo, Aerolinhas Brasileiras, EL AL Airlines, Nippon Cargo Airlines, Asiana Airlines and Cargolux Airlines International were involved in the conspiracy to keep the cargo prices at an artificial high level.
The plea agreement with Martinair states that the company participated in a conspiracy with other airlines aimed at suppressing and eliminating competition by fixing one or more components of the cargo rates charged to customers for certain air cargo services. “In furtherance of the conspiracy, the defendant, through its officers and employees, engaged in discussions and attended meetings with representatives of one or more providers of air cargo services. During these discussions and meetings, agreements were reached to fix one or more components of the cargo rates to be charged to purchasers of certain air cargo services”. “By fixing prices for the shipment of products to and from the United States, this cartel targeted a critical piece of our country’s economy,” said Scott D. Hammond, deputy assistant attorney general in charge of the Antitrust Division’s Criminal Enforcement Program.
In difficult economic times, how many companies (or should we say: competitors that control large parts of the market) are tempted to commit similar schemes? And further more: given the impact on the financial/economic markets of these schemes and the sheer amount of illegal gain, how much resources should governments put to detect them?
