The Federal Court in Sydney has penalised Korean Air Lines Co Ltd $5.5 million for price fixing as part of a cartel.
The Australian Competition and Consumer Commission has pursued a number of international airlines for cartel conduct in relation to the carriage of air freight. Korean Air Lines is the eighth international airline to settle proceedings against it.
This penalty, combined with those already ordered against other airlines, brings the total ordered in Australia against these cartel participants to $52 million. These penalties in total are the highest to be ordered in respect of a single investigation.
The ACCC instituted proceedings against Korean Air Lines on 5 March 2010 alleging that it reached and gave effect to understandings with other international airlines. Korean Air Lines has admitted that it did so in relation to:
- fuel surcharges during the period May 2003 to February 2006
- security surcharges during the period May 2003 to February 2006, and
- customs fees during the period May 2004 to October 2005.
This conduct applied to the international carriage of freight from Indonesia to destinations throughout the world, including Australia. The arrangement in relation to customs fees also applied to cargo from Australia to Indonesia.
Korean Air Lines admitted to making and giving effect to the illegal price fixing understandings with other international airlines.
ACCC chairman Rod Sims said the penalty sought would have been higher if Korean Air Lines had not cooperated and made admissions at this stage in the litigation.
"Korean Air Lines agreed to provide further assistance by making additional documents available for use against other respondents."
"These proceedings demonstrate the ACCC's determination to pursue sanctions for cartel conduct," Mr Sims said.
Justice Stone also made orders restraining Korean Air Lines from engaging in similar conduct for a period of five years and to pay a contribution towards the ACCC's costs of $200,000.
Proceedings against Singapore Airlines, Cathay Pacific, Emirates, Air New Zealand, Malaysian Air Lines and Thai Airways International continue. The ACCC's proceedings against Garuda are stayed pending the outcome of an appeal to the High Court.
Cartel conduct includes:
- price fixing
- output restrictions
- allocating customers, suppliers or territories
- bid-rigging.
Further information is available on the ACCC cartels page: www.accc.gov.au/cartels