The global air cargo cartel was about the biggest price
fixing racket ever busted. Name an airline, and you can be pretty
sure it was involved.
Back in the mid nineties, the airlines started co-operating
globally to fix prices on air cargo fuel and security surcharges.
When they got caught, most airlines pleaded guilty, but they still
copped massive penalties. In Australia alone airlines paid around
$100M in fines. Qantas led the Australian field at $20M, and
globally it paid fines of over $105M.
That's why competition nerds everywhere fell off their
chairs last week when news broke that Garuda Indonesia and Air New
Zealand had defended the case against them in Australia, and won.
After 5 years of litigation, the ACCC's prosecution failed on a
The judge found that both airlines had been involved in price
fixing, although not to the extent that the ACCC alleged. And a lot
of the conduct occurred more than six years before the case
commenced, meaning that the ACCC would not have obtained penalties
for it even if it had won.
But the ACCC's biggest problem was that the price fixing
didn't occur in an Australian market, putting it outside the
reach of the (then) Trade Practices Act provisions. The
ACCC's case principally related to cargo flights into
Australia, and the judge decided that the relevant market was the
market for air cargo services in the origin country, not in
The price fixing laws have changed since this conduct occurred
and, under the new laws, we think the outcome would have been
different. The new rules prohibit price fixing conduct between
competitors. Competitors do not have to be competitors 'in a
market', but competitors in relation to the supply of the
relevant goods or services the subject of the price fixing.
The legislation extends to conduct, but not to markets, outside
Australia. That means that, under the new rules, the price fixing
conduct would have been caught and the airlines would likely have
Talk about dodging the bullet.
We do not disclaim anything about this article. We're
quite proud of it really.
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