The alleged international air freight cartel is one of the
Australian Competition and Consumer Commission's
(ACCC) and New Zealand Commerce Commission's
(NZCC) largest ever cartel investigations. In
addition Auskay International, a Melbourne vacuum importer has
commenced a representative proceeding (class
action) against certain international carriers in relation
to the same alleged cartel. The alleged cartel allegedly set the
level of fuel, security and war-risk surcharges for international
air freight since 2000 to 2006.
In an agreement with the ACCC both Qantas and British Airways
(BA) admitted to giving effect to an understanding
with other airlines with respect to fuel surcharges and received a
penalty of A$20 million and A$5 million respectively from the
Australian Federal Court. On this basis Qantas and BA have settled
their respective proceedings with the ACCC. Interestingly, no such
agreement has yet been made with the NZCC.
Despite Qantas and BA's admissions, which were solely for
the purpose of the ACCC proceedings, a number of other
international carriers are vigorously defending all three sets of
proceedings on the basis that the ACCC and NZCC do not have
jurisdiction to bring proceedings for alleged agreements made
overseas. If any such agreements were made they could potentially
be in breach of the overseas countries' competition laws, but
not Australian and New Zealand law.
These proceedings highlight for those businesses involved in
international transport services the risk of transporting goods
between countries and the need for compliance with the laws of the
country of origin and country of destination. However, what about
double jeopardy? Can an act committed in the country of origin also
breach the law of the country of destination? The ACCC, NZCC and
Auskay contend that any act committed overseas which potentially
breaches local competition law is an actionable breach.
This issue goes to the heart of the powers of the ACCC and NZCC
to investigate global cartels and, therefore, is likely to go all
the way to the High Court in Australia and to the New Zealand
Both Qantas and BA have joined with other respondents in the
class action to argue that alleged agreements reached overseas
cannot constitute a breach of Australian law, notwithstanding the
agreement reached in the separate ACCC proceedings.
Auskay's statement of claim in the class action has now been
struck out twice by the court. The last version struck out was
Auskay's fourth attempt at pleading its case. Auskay has now
sought leave to appeal to the Full Federal Court against the most
recent strike out decision.
One of the key issues is the pleading of a market in Australia.
The court has so far held that Auskay has not pleaded sufficient
material facts to establish the market or markets contended for.
Another fundamental issue is the jurisdictional reach of the
Trade Practices Act 1974 (Cth) to alleged agreements made
The Full Federal Court is due to hear the appeal in Melbourne on
17 and 18 May 2010.
DLA Phillips Fox is representing a carrier in all three
DLA Phillips Fox is one of the largest legal firms in
Australasia and a member of DLA Piper Group, an alliance of
independent legal practices. It is a separate and distinct legal
entity. For more information visit
This publication is intended as a first point of reference and
should not be relied on as a substitute for professional advice.
Specialist legal advice should always be sought in relation to any
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