Court rules price fixing agreements breached Australian law

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Air New Zealand Boeing 777-300ER

The High Court of Australia ruled in favour of the Australian Competition and Consumer Commission (ACCC) that price fixing agreements entered into between Air New Zealand, Garuda Indonesia and other airlines breached Australian competition law.

The ACCC took action against Air New Zealand in 2009 and Garuda in 2010 alleging they colluded with other airlines on charges for fuel, security, insurance surcharges, and a customs fee, for airfreight from origin ports in Hong Kong (for both airlines), Singapore for Air New Zealand and Indonesia for Garuda to destination ports in Australia.

The principle issue on appeal was whether there was a market “in Australia” for the air cargo services which the airlines competed for, under the Trade Practices Act (TPA) 1974, and the High Court found the fact made by the primary judge led to the conclusion that there was such a market.

The airlines conduct occurred between 2002 and 2006 under the TPA before the Competition and Consumer Act 2010 came into effect.

ACCC commissioner, Sarah Court says: “Today’s judgment sends a clear message that the ACCC is committed to pursuing cartel conduct that impacts on Australian business and consumers.”

The Court also reaffirmed the decision of the Full Court in rejecting a defence raised by the airlines that foreign laws and administrative practices of a foreign regulator compelled each of them to arrive at or give affect to the understandings.

A further defence raised by Garuda that there was a practical and operative inconsistency between the Air Navigation Act 1920 when read with the Australia-Indonesia Air Services Agreement, and the prohibition of ss 45 and 45A of the TPA was also rejected.

The ACCC took proceedings against 15 international airlines, 13 settled with Federal Court judges imposing penalties totalling AUS$98.5 million against Qantas, British Airways, Air France-KLM, Cargolux, Martinair, Japan Airlines, Korean Air Lines, Malaysian Airlines, Emirates, Cathay Pacific, Singapore Airlines and Thai Airways.