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Huge money involved in case Air NZ prepares to defend

September 8, 2015 Aviation, Headline News No Comments Email Email

egtmedia59Air New Zealand is preparing to defend a multi-billion-dollar class action in the US  alleging collusion to fix prices on international air cargo services.

The New Zealand carrier, along with Air China and Air China Cargo, Air India, and Polar Air Cargo and its parent Atlas Air Worldwide, failed to end the claim last week, the New Zealand Herald reported.

The plaintiffs estimate damages at about USD 2.66 billion, which would triple to as much as USD 7.98 billion under US antitrust laws. http://www.thavornbeachvillage.com/phuket-hotel-promotion-package/

At a hearing in the US District Court, Judge John Gleeson set a final pre-trial hearing for 8 January 2016. Jury selection should begin on 25 January 2016.

The claim was filed in 2006, on behalf of six freight forwarders, by global law firm Hausfeld. The firm has reached settlements worth almost USD 1.04 billion with 27 airlines, including Qantas, which paid USD 26.5 million, the NZ Herald reported.

The freight forwarders allege the airlines “conspired to develop and implement an industry-wide index for calculating fuel and security surcharges that were applied to thousands of routes flown worldwide by the defendants, including flights to and from the United States”, which the airlines then adjusted.

The alleged price-fixing has been the subject of antitrust actions around the world, with big settlements from international carriers in Europe and the US.

Following a similar case in Australia, the Australian Competition and Consumer Commission (ACCC) last December lodged notice of appeal against the Federal Court’s decision to dismiss the ACCC’s proceedings against Air New Zealand Ltd (Air New Zealand) and PT Garuda Indonesia Ltd (Garuda) in relation to an alleged air cargo cartel.

In its proceedings, the ACCC alleged that Air New Zealand and Garuda contravened the Trade Practices Act 1974, now called the Competition and Consumer Act 2010 (the Act), by fixing the level of various surcharges to be applied to air cargo services supplied by a number of airlines between 2001 and 2006.

The trial judge concluded that although a number of the price fixing arrangements alleged by the ACCC were established which may have had an effect on prices in Australia, the cartel conduct did not take place in a “market in Australia” in which the airlines were competing, as was required by the Act at the time.

“The ACCC’s appeal is solely focused on the Court’s finding that there was no ‘market in Australia’,” ACCC Chairman Rod Sims said.

Written by Peter Needham

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