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Europe

EU fines airlines over air cargo cartel

The EU has slapped one of its biggest fines in history on a number of airlines for fixing cargo prices. The case involves airlines that fly around the globe, from Air France-KLM, to British Airways and Quantas.

Air plane

The airlines were found to be in clear violation of EU rules

The European Union's competition watchdog issued fines Tuesday to 11 airlines totaling 799.4 million euros ($1.1 billion) for running a global cargo cartel.

The cargo carriers were found to have coordinated their action on surcharges for fuel and security over a six-year period, between 1999 and 2006.

"With today's decision, the European Commission is sending a clear message that it will not tolerate cartel behavior," EU Competition Commissioner Joaquin Almunia told reporters in Brussels.

Joaquin Almunia

EU Commissioner Almunia said the case was "deplorable"

The fine imposed is one of the biggest in EU history. The bloc's rules forbid most forms of price fixing among competitors.

"It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers," Almunia added.

No fine for the whistleblower

Air France-KLM was hit with the largest fine of 310 million euros. British Airways came in second, having to pay a 104-million-euro penalty. Luxembourg's Cargolux will have to pay 79.9 million euros, while Scandinavian carrier SAS was ordered to pay 70.2 million euros.

Other airlines involved in the cartel and slapped with fines were Singapore Airlines, Air Canada, Quantas, LAN Chile, Martinair and Japan Airlines.

The Commission said it dropped charges against eleven other airlines, including German carrier Lufthansa and its subsidiary Swiss Air, because it was the first to provide information about the cartel.

According to the commission the cartel the airlines began fixing fuel-surcharges in 1999. Later the cooperation expanded with the introduction of a security surcharge and refused to pay a commission on those surcharges to their clients.

"By refusing to pay a commission, the airlines ensured that surcharges did not become subject to competition through the granting of discounts to customers. Such practices are in breach of the EU competition rules," the commission said in a statement.

Author: Andreas Illmer (dpa, AFP, AP)
Editor: Rob Turner

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