BRUSSELS, Belgium — The European Union has fined 11 airlines, Air Canada among them, a total of almost US$1.1 billion for fixing prices on international cargo shipments, leading to higher prices for businesses to move their goods.
The European Commission, the EU’s competition watchdog, said Tuesday that the carriers “co-ordinated their action on surcharges for fuel and security without discounts” between December 1999 and February 2006, when the EU’s investigation stopped the cartel.
“Had it not been for the commission’s intervention, the cartel would not have ended in 2006,” said Competition Commissioner Joaquin Almunia.
Air France-KLM received the largest fine, euro310.1 million of the total of euro799.4 billion levied against all 11. Air France-KLM will also have to pay the euro29.5 million fine for Martinair, which it now owns.
Air Canada (TSX:AC.B), which took a $125-million provision related to the investigation a couple of years ago, said it was fined just over euro21 million, the equivalent of C$29.4 million based on an exchange rate of $1.397.
“The amount of the fine is more than adequately covered by the $125-million provision taken by the company in 2008 and the company is studying the decision and will determine its next steps, including possible appeal,” the airline said in a statement.
Air Canada said the provision specifically addressed the proceedings before the European Commission, but not those in all jurisdictions.
“Management has determined it is not possible at this time to predict with any degree of certainty the outcome of all proceedings and investigations,” the statement said.
Air Canada stock was off 18 cents, or 4.9 per cent, at $3.49 Tuesday afternoon on the Toronto Stock Exchange.
Among the other airlines, British Airways PLC was fined the second most, euro182.9 million.
Cathay Pacific, Cargolux, Japan Airlines, LAN Chile, SAS, Singapore Airlines and Qantas will also have to pay fines between euro8.2 million and euro79.9 million.
The commission dropped charges against 11 other carriers and one consultancy because it couldn’t prove they participated in the cartel.
Lufthansa escaped a fine because it blew the whistle on the cartel.
All other carriers, except Singapore Airlines, had their fines reduced by between 15 per cent and 50 per cent for co-operating with the EU’s investigation.
“It is deplorable that so many major airlines co-ordinated their pricing to the detriment of European businesses and European consumers” Almunia said. “With today’s decision the Commission is sending a clear message that it will not tolerate cartel behaviour.”
The U.S. Department of Justice has already charged 18 airlines and several executives in its investigation of the cargo cartel and imposed more than US$1.6 billion in fines.
The EU can’t pursue companies or individuals with criminal charges, but Almunia didn’t rule out that individual countries might impose criminal charges.
— With files from The Canadian Press