Settlement agreements in air cargo industry
On 22 October 2012 the Competition Tribunal (Tribunal) confirmed
a settlement agreement between British Airways (BA) and the
Competition Commission (Commission). This agreement follows an
investigation by the Commission into the setting of fuel surcharges
by BA and its competitors in the international market for air
freight and/ or cargo services, including services into and from
South Africa. BA has agreed to pay an administrative penalty in the
amount of approximately ZAR 12 million to the Commission. The
Commission initiated its complaint in March 2006.
In another matter, the Tribunal confirmed a settlement agreement
between Air France Cargo (Air France) and KLM Cargo (KLM). This
agreement follows an investigation into selling prices for cargo
service and in respect of which Air France and KLM have agreed to
collectively pay an administrative penalty of approximately ZAR 25
In the BA matter, the Commission's investigation revealed
that BA World Cargo (BAWC), a division of BA, had engaged in
discussions and exchanged and confirmed information with its
competitors between March 2002 and February 2006. The Commission
concluded that BAWC's conduct constituted a contravention of
the Competition Act.
Following the investigation and subsequent referral of the
complaint by the Commission, BA entered into a settlement agreement
with the Commission, admitting that it had engaged in the alleged
conduct. The Commission found that BA had been fully co-operative
during the Commission's investigation. The administrative
penalty is less than 10% of BACW's annual turnover.
In the Air France and KLM matter, the Tribunal also confirmed a
settlement agreement between Air France, KLM and the Commission.
The Commission investigated allegations that Air France and KLM,
along with other air cargo operators, had directly or indirectly
fixed elements of selling prices for cargo services.
During its investigation, the Commission found that it was a
common practice among airlines providing air freight or cargo
services to communicate and align their position on the charging
and/ or determination of levels of various surcharges.
The Commission found that Air France had engaged in discussions
and exchanged and confirmed information on the movement of air
cargo fuel surcharges in order to monitor and coordinate the
application of fuel surcharges. KLM was also found to have engaged
in discussions, mainly with Lufthansa Cargo, regarding the movement
of international air cargo fuel surcharges.
To read the British Airways consent order, click here.
To read the Air France Cargo consent order, click here.
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