Air NZ penalised $15 million for price fixing charge

Air NZ penalised $15 million for price fixing charge

The Australian Federal Court has penalised Air New Zealand (Air NZ) with a $15 million fine after the ACCC took legal action against a global air cargo cartel.

The Court found Air NZ made and gave effect to agreements with other airlines to fix the price of fuel and insurance surcharges on air freight services from Hong Kong, and insurance and security charges from Singapore, to various locations including Australian airports between 2002 and 2007.

The ACCC Commissioner Sarah Court says this type of behaviour from airlines reduces competition in Australia.

"These illegal price fixing agreements unfairly reduced competition for the transport cost for goods flown into Australia," says Court.

Air NZ has been ordered to pay a pecuniary penalty of $11.5 million for price fixing in relation to the fuel surcharges findings, and $3.5 million in relation to the insurance and security surcharge findings.

The Air NZ fine is part of a concerted effort from competition regulators worldwide to crack down on an air cargo cartel.

Fines or penalties have been handed down against various airlines in Europe, the United States, Korea, New Zealand, Canada, and India.

So far, the Australian Federal Court has imposed penalties totalling $113.5 million in relation to 14 airlines involved in the air cargo cartel. Out of the 14 airlines, Qantas was the biggest hit of $20 million in December 2008.

Court says the ACCC's commitment to this crack down sends a big message to flight operators globally that Australia will not tolerate this type of uncompetitive behaviour.

"This decision sends a strong warning to overseas and domestic operators that the ACCC can and will continue to defend competition and the rights of Australian customers and businesses by taking action against anti-competitive conduct," says Court.

"Our efforts over the last decade and these significant penalties make clear the ACCC's commitment to tackling cartels."

Air NZ has also agreed to pay $2 million towards the ACCC's legal costs.

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