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Garuda ordered to pay $19 million for price fixing

May 31, 2019 Headline News No Comments Email Email

At the end of a very lengthy court battle, Australia’s Federal Court has ordered PT Garuda Indonesia Ltd (Garuda) to pay massive penalties totalling AUD 19 million for colluding on fees and surcharges for air freight services, relating to conduct between 2003 and 2006.

The penalties follow the ACCC’s court action against a global air cargo cartel, which has so far resulted in penalties of AUD 132.5 million against 14 airlines, including Air New Zealand, Qantas, Singapore Airlines and Cathay Pacific.

The Court found that between 2003 and 2006, Garuda made and gave effect to agreements that fixed the price of security and fuel surcharges, as well as a customs fee from Indonesia. It was ordered to pay AUD 15 million.

A further AUD 4 million was ordered for the imposition and level of insurance and fuel surcharges from Hong Kong.

“Price fixing is a serious matter because it unfairly reduces competition in the market for Australian businesses and consumers, and this international cartel is one of the worst examples we have seen,” ACCC Chair Rod Sims said.

“We are committed to pursuing cartel conduct from both domestic and overseas operators, and think the total penalty ordered against all the airlines involved sends a strong deterrent message, particularly when it comes to international anti-competitive conduct.”

“The ACCC has recently entered more formal agreements with the FBI on cooperation and information sharing, and has strong links to other competition regulators worldwide, which mean our scope is much broader than Australian businesses,” Sims said.

Aircraft on right is in Garuda’s current livery; the other two are in the airline’s previous livery. The photo, by Gunawan Kartapranata, was taken in 2010, which is a full seven years after some of the conduct complained of in the court case.

 

“Any business anywhere that enters an agreement that affects Australian businesses and consumers should clearly take note.”

This case is a long running one for the ACCC. In 2014, the Federal Court initially dismissed the ACCC’s case against Air New Zealand and Garuda. The ACCC appealed the decision and the Full Court of the Federal Court upheld the ACCC’s appeal.

Garuda and Air NZ appealed the decision to the High Court, which unanimously dismissed the appeal.

“We are pleased to finally have resolution of this matter, which confirms our view that it was an important matter for us to appeal.”

Justice Perram also ordered Garuda to pay the ACCC’s legal costs (which could be substantial, given the length of the legal proceedings).

Edited by Peter Needham

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