Australian Federal Court clears Air New Zealand and Garuda

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Air New Zealand and Garuda Indonesia have been cleared of cargo industry price fixing in Australia. 

A court verdict was delivered last week and aviation leaders say the decision is important as it highlights how the clarity of the legal boundaries of markets is needed for international operators.

The Australian Federal Court dismissed the proceedings in the case which was brought by consumer watchdog Australian Competition and Consumer Commission (ACCC) in 2010. 

The ACCC had attempted to sue Air New Zealand and Garuda Indonesia, accusing the two companies of making arrangements or understandings with other international air cargo carriers.

The carriers were based in Hong Kong and Singapore and the alleged agreements took place between 2000 and 2006.

The court heard how the two airlines allegedly fixed fuel, security and insurance surcharges on air cargo services. 

In Australia it is illegal for competitors to work together to fix prices, rather than compete against each other.

The airlines had argued the agreements were appropriately authorised by the relevant regulators outside the Australian market.

The court found the carriers had not acted unlawfully. ACCC chairman Rod Sims  adds: “This is a long and complex judgment which the ACCC will carefully consider.”

Air New Zealand’s general counsel, John Blair, says: “This decision is important in aviation because international operators need clarity of the legal boundaries of the ‘markets’ in which they operate. The distinction between where competitive markets exist and where jurisdiction lies determines which regulators’ requirements must be met. Respect for national sovereignty and legal jurisdiction has been a foundation of the aviation industry since 1919.”

The last such legal action was in August, when DB Schenker announced it was suing air cargo carriers claiming they fixed airfreight fuel charges. Schenker said at the time, the carriers, “illegally conspired to fix fuel and security surcharges,” for airfreight shipments from, to, and within the US in 1999.

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