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Air France, Others Settle US Price-Fixing Charges

Reuters
Thursday, 26 Jun 2008 | 1:12 PM ET

Air France-KLM and three other airlines agreed to pay fines totaling $504 million to settle U.S. price-fixing charges involving vast shipments of consumer goods ranging from electronics to medicines, the Justice Department said Thursday.

Air France-KLM will pay $350 million, the second-largest criminal fine ever obtained by the Justice Department's antitrust division, the government said in a statement.

Air France and KLM operated as separate companies at the start of the Justice Department's price-fixing investigation until May 2004, when they combined under a single holding company.

Cathay Pacific will pay a $60 million fine while SAS will pay $52 million and Martinair $42 million, the Justice Department said.

"The airlines each engaged in a conspiracy to suppress and eliminate competition by fixing the cargo rates charged to customers for international air shipments," the government said in a statement.

The conspiracy began as early as 2001 and continued until at least 2006, it said.

Fuel surcharges imposed by some of the airlines soared as much as 1,000 percent during the period, far outpacing the rise in fuel costs.

"The charged conduct affected billions of dollars of consumer and other goods -- including produce, clothing, electronics and medicines -- shipped by these airlines and their competitors in the air cargo industry," it said.

The settlement was part of a wide-ranging investigation of the air cargo industry by the Justice Department's antitrust division.

Last year, British Airways and Korean Air Lines pleaded guilty and agreed to each pay a $300 million criminal fine for conspiring to fix cargo rates for international air shipments and to fix passenger fuel surcharges or fares for some routes.

On Jan.14, 2008, Qantas Airways agreed to pay a $61 million criminal fine for cargo price-fixing.

And last month, Japan Airlines was sentenced to pay a $110 million criminal fine for similar price-fixing.

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