Air NZ in court as price-fixing case gets under way

File photo

Air New Zealand was among a group of major international airlines in court yesterday facing the start of a price-fixing cartel case brought by the Commerce Commission.

The commission's case, which alleges airlines colluded to raise the price of freighting cargo by imposing fuel surcharges on shipments in and out of the country, started yesterday in the High Court at Auckland.

The commission has said the key issue in the first stage of the case is the meaning of a market in New Zealand and whether air cargo services inbound to the country were part of such a market.

The remainder of the case was due in July next year to deal with the price-fixing allegations.

In its opening submission yesterday, the commission said the effects of price-fixing on inbound air cargo would be felt most keenly by consumers in New Zealand, not elsewhere. No other regulatory body in any other jurisdiction had a mandate to enforce anti-trust law, as may exist, to protect consumers in New Zealand, it said.

The commission alleges that between 2000 and 2006 revenue was boosted through the defendants price-fixing air cargo services by agreeing on fuel and security surcharges.

The defendants' revenue for air cargo services into and out of New Zealand during the relevant period was more than $1 billion, it said.

Competition expressed itself as rivalrous behaviour, which the defendants engaged in, in relation to inbound air cargo services when they supplied New Zealand, including timing of landing slots, flight arrivals, the care, speed and skill with which the cargo was handled, and customer service, the commission said.

Counsel for the commission Brendan Brown, QC, said where participants performed a service was where they competed, and where they competed was the location of the market.

Proceedings have been dropped against United Airlines, PT Garuda Indonesia and six Air New Zealand executives.

The commission has said Qantas Airways, British Airways and Cargolux International Airlines had agreed to settlements, which involved admitting liability and paying penalties.

The Herald understands that if the court finds the commission has no jurisdiction over the inbound market, the second part of the trial next year will be limited to the outbound market.

Air New Zealand general counsel John Blair last month said the carrier had maintained from the start of the commission's investigation that neither the airline nor its employees had committed any breach of the Commerce Act.

The first stage of the case is expected to last five weeks.

CARTEL CASE

The New Zealand Commerce Commission alleges carriers colluded to raise the price of freighting cargo by imposing fuel surcharges on shipments in and out of New Zealand.

DEFENDING

Air New Zealand, Cathay Pacific Airways, Emirates, Japan Airlines International, Korean Air Lines, Malaysian Airlines System Berhad, Singapore Airlines Cargo and Singapore Airlines, Thai Airways International Public, two airline executives (not from Air New Zealand).