The Federal Court in Sydney has today ordered Emirates to pay a total of $10 million in penalties for engaging in cartel conduct in breach of the Trade Practices Act 1974 (now the Competition and Consumer Act 2010).
This decision comes just a week before the Australian Competition and Consumer Commission’s main proceedings are due to commence against a number of international airlines for alleged cartel conduct. The proceedings relate to alleged price fixing of fuel and other surcharges.
Emirates is the tenth airline to settle in these proceedings.
“This settlement with Emirates brings the total penalties ordered in Australia against international airlines involved in the cartel to $68 million. These are the highest penalties to have ever been ordered in an ACCC investigation,” ACCC Chairman Rod Sims said.
“This result sends a strong message that the ACCC and the Australian courts will not tolerate any business – regardless of size or country of origin – engaging in cartel conduct that harms competition in Australia. Cartel conduct is illegal and often results in increased prices for consumers.”
The ACCC commenced the proceedings against Emirates in 2009, alleging that the airline, in conjunction with other airlines, fixed prices relating to fuel and other surcharges. As part of the settlement, Emirates has admitted to:
- arriving and giving effect to illegal understandings relating to a fuel surcharge, a security surcharge and a customs fee on air freight carried from Indonesia to Australia and other countries between October 2001 and May 2006. This resulted in a $7 million penalty; and
- attempting to arrive at an understanding with DAS Air Cargo relating to rates charged for the supply of air freight services from Australia. This resulted in a $3 million penalty.
In addition to the penalty, Justice Katzmann ordered Emirates to restrain from engaging in similar conduct for five years and to pay $500,000 towards the ACCC’s costs.
The ACCC’s proceedings against Singapore Airlines, Cathay Pacific, Air New Zealand and Thai Airways are due to be heard in the Federal Court in Sydney from 22 October 2012. The ACCC is also proceeding against Garuda Indonesia following a High Court decision last month declaring that the airline was not eligible for foreign state immunity.
“The ACCC has been pursuing this large and complex litigation for four years, so the October trial will be an important milestone in our continuing fight to stop cartel conduct,” Mr Sims said.