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Global freight-forwarder fined $1.15 mln for NZ price-fixing

Global freight-forwarder fined $1.15 mln for NZ price-fixing

by Paul McBeth

Dec. 17 (BusinessDesk) – EGL Inc., one of two American freight companies to reach a settlement over the alleged air cargo cartel, faces a $1.15 million fine for its role in fixing freight forwarding prices.

The Texas-based company admitted breaching the Commerce Act by entering into a surcharge agreement with rivals that controlled and maintained prices for freight-forwarding between the U.K. and New Zealand.

EGL and Geologistics International Ltd. settled with the Commerce Commission, which filed proceedings in September. The settlements had to be ratified by the court.

In the High Court in Auckland, Justice Rodney Hansen yesterday accepted the commission’s submission to cut EGL’s penalty in half because the admission of guilt was made at an early stage.

Entities found guilty of cartel behaviour face a fine of up to $10 million, three times the value of any gain, or 10% of all turnover.

“It is in the public interest that substantial allowance is made for a high level of cooperation, both for the purpose of recognising the savings achieved and providing appropriate incentives to firms and individuals who have engaged in anti-competitive conduct,” Hansen said.

“I have regard to the deterrent effect of penalties likely to be imposed in other jurisdictions and adverse publicity which is likely to follow investigations in Europe and the United States.”

EGL is thought to have made a “low six-figure sum” from its collusion, and Hansen said “although the conduct did not generate significant commercial gain for EGL, it enabled all members of the cartel to impose a surcharge without the need to consider their competitors’ likely response.”

EGL will also have to pay the regulator’s $50,000 court costs. Kate Morrison, general manager of enforcement at the Commission, said the regulator was pleased with EGL’s early admission and the penalty reflected the company’s co-operation.

The alleged price-fixing has been the subject of antitrust process worldwide, with big settlements from multi-national airlines in Europe and the U.S. Some of the alleged agreements appear to have been in place since 2001.

In 2006 air freight forwarding services in and out of New Zealand generated $450 million in revenue.

(BusinessDesk) 12:41:32

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