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 Supreme Court.
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 outside Australia.
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 proceedings.
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