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Court orders two airlines to pay fines for breaches

TWO airlines have been fined a total of $23 million for price fixing and other breaches of the Trade Practices Act.

The Federal Court ordered Cathay Pacific Airways and Singapore Airlines Cargo to pay $11.25 million and $11.75 million respectively for engaging in cartel conduct.

In one instance, Singapore Airlines Cargo was found to have tried to fix rates for meat exports going to Australian and United States troops stationed in the Middle East.

A wide-ranging Australian Competition and Consumer Commission investigation uncovered this and other breaches.

Twelve airlines have now agreed to settle as part of a larger action launched by the ACCC against a number of international carriers engaged in cartel conduct.

The latest payouts are the second and third largest ordered to date, bringing the total penalties stemming from the ACCC investigation to $91 million.

Rod Sims, chairman of the consumer watchdog, said this was the highest total penalties resulting from a single ACCC probe.

He said the conduct was a "serious breach of the law".

"The sheer scale of these penalties will act as a strong deterrent to any business considering engaging in cartel conduct, regardless of size or country of origin," Mr Sims said.

"The ACCC is fiercely committed to stopping cartel conduct, which is illegal, harms competition and often increases prices for consumers," Mr Sims said.

As part of the settlement Singapore Airlines Cargo admitted to contravening section 45 of the Trade Practices Act, including fixing prices for various surcharges, fees and services, and attempting to make a price fixing arrangement with Malaysia Airlines regarding rates for airfreight services for transporting meat from Australia to the Middle East.

The latter happened in January 2003 after the US announced it was deploying 35,000 troops in the Middle East. At this time, the Australian Government had also announced it was sending additional troops to Iraq.

Singapore Airlines Cargo's most senior representative in Australia, the regional vice-president for South West Pacific, identified the build-up of US troops would lead to increased demand for Australian meat to be flown to the Middle East.

Cathay Pacific admitted to attempting to make a price-fixing arrangement with Qantas regarding rates for airfreight services between Hong Kong and Australia.

In September 2004 Cathay Pacific was operating a weekly 747 freighter between Hong Kong and Sydney and a new Qantas service was having a significant competitive impact.

Cathay Pacific proposed that Qantas increase its price by 25% to the level that Cathay Pacific was charging.

Had this attempt been successful, the price increase by Qantas on a fully laden freighter would have been more than $80,000 per week.

The ACCC's trial against Air New Zealand Ltd and PT Garuda Indonesia Limited continues before Justice Perram in the Federal Court.

Topics:  accc airlines federal court fines


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