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Singapore Airlines Cargo settle air cargo cartel case

Singapore Airlines Cargo becomes seventh airline to settle air cargo cartel case

The High Court has ordered Singapore Airlines Cargo PTE (SIA Cargo) to pay a $4.1 million penalty for price fixing in breach of the Commerce Act. The company is the seventh airline to settle with the Commerce Commission in the long-running air cargo cartel case.

Today's penalty judgment brings the total penalties ordered in the case to $25.475 million. The Commission previously reached settlements with British Airways PLC, Cargolux Airlines International S.A, Emirates, Korean Air Lines Co., Limited, Qantas Airways Limited and Japan Airlines International Co., Limited.

SIA Cargo admitted liability for agreeing fuel and security surcharges in Indonesia and Malaysia for cargo flown to New Zealand over a period of nearly four years from October 2001 (security surcharges) and from mid-2002 (fuel surcharges). The penalty was recommended to the court by both the Commerce Commission and SIA Cargo as part of a pre-trial settlement and included a 20% discount to recognise SIA Cargo’s admissions. SIA Cargo was also ordered to pay costs to the Commission.

The Commission agreed to discontinue its proceedings against Singapore Airlines Limited, the parent company of SIA Cargo. SIA Cargo took over Singapore Airlines’ cargo operations in mid-2001.

"The Commission is pleased to have settled with another airline in this significant case. Price fixing is unlawful and the fines imposed in the air cargo case should be a deterrent to others who might breach the Commerce Act. The fines are also a reminder to companies that it is important to have effective compliance programmes in place to prevent anti-competitive behaviour," said Commerce Commission Chair Dr Mark Berry.

SIA Cargo and Singapore Airlines were among the 13 airlines the Commission filed proceedings against in December 2008, alleging that the airlines colluded to impose fuel and security surcharges for air cargo shipments to and from New Zealand.

Section 30 of the Commerce Act makes price-fixing agreements between competitors unlawful. This includes agreements with the purpose, effect or likely effect of fixing, controlling or maintaining prices, or that provide a mechanism for doing so. An agreement can be a formal document, such as a contract. An agreement can also be very informal.

A company that contravenes section 30 may be ordered to pay penalties under section 80 of the Commerce Act. The penalty must not exceed the greater of:
• $10 million
• or, if it can be readily ascertained and if the Court is satisfied that the contravention occurred in the course of producing commercial gain, three times the value of any commercial gain resulting from the contravention
• or, if the commercial gain cannot be readily ascertained, 10% of the turnover of the body corporate and all of its interconnected bodies corporate (if any).

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