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Current as of 30/09/16 01:39PM NZST
Aviation, tourism and energy writer for the Business Herald

Air NZ 'disappointed' over price-fixing ruling

Air New Zealand says it is "considering its options" after losing a cargo price-fixing case that could result in millions of dollars in penalties. Photo / Jason Oxenham
Air New Zealand says it is "considering its options" after losing a cargo price-fixing case that could result in millions of dollars in penalties. Photo / Jason Oxenham

Air New Zealand says it is "considering its options" after losing a cargo price-fixing case that could result in millions of dollars in penalties.

The Australian Competition and Consumer Commission (ACCC) has won an air cargo cartel appeal against Garuda Indonesia and Air New Zealand that agreed surcharges on cargo breached that nation's price-fixing laws.

The two were the remaining airlines of 15 that hadn't settled with the Australian regulator. A full bench of the Australian Federal Court ruled the price-fixing took place in a "market in Australia".

Other airlines that settled in the case have paid penalties ranging from A$5 million ($5.6 million) to up $20 million paid by Qantas. In total they have paid A$98.5 million. "Air New Zealand is disappointed by today's cargo case appeal decision by the Federal Court and will now consider its options," a spokeswoman said.

The ACCC said it was possible to appeal from Australia's Federal Court to the High Court.

Air New Zealand has been involved in a series of cargo cartel cases in several countries for the past decade and still faces two class actions in the United States, one in relation to freight pricing and a second alleging it had acted anti-competitively with fares and surcharges on trans-Pacific routes.

Those, and the Australian case, are listed as contingent liabilities in the airline's financial statements.

ACCC chairman Rod Sims said: "The air cargo case is a very significant one for the ACCC, as it involved a substantial number of airlines engaging in price-fixing conduct around the world.

"Although it is no longer a requirement of our cartel laws that it be established that price-fixing occurred in a market in Australia, this decision is significant because it confirms the ACCC's view that the conduct by the airlines in fixing air cargo surcharges to be paid by Australian importers and ultimately passed on to Australian consumers, were caught by Australian competition laws."

Air New Zealand paid $8 million in a fine and costs in 2013 to settle a long-running case brought in this country by the Commerce Commission over cargo price fixing.

Worldwide airlines have paid hundreds of millions following cases centred on claims airlines collaborated to fix prices, partly attributed to fuel surcharges and security charges.

Air New Zealand shares closed up 1c at $2.88 yesterday.

Cargo case

Air NZ facing millions of dollars in penalties.

Airline one of two not to settle with Australian regulator.

A$98.5 million paid by other airlines that have settled.

Penalties range from A$5 million to up $20 million paid by Qantas.

Australian Federal Court ruling can be appealed.

- NZ Herald

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