Antitrust Law Daily  Indonesian airline to pay $13M for price fixing of air freight services in long-running Australia probe
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Thursday, May 30, 2019

 Indonesian airline to pay $13M for price fixing of air freight services in long-running Australia probe

By J. Preston Carter, J.D., LL.M.

Garuda Indonesia was ordered by a federal court in Australia to pay penalties of (Aus.) $19 million (approximately U.S. $13 million) for colluding on fees and surcharges for air freight services.

Australia’s Competition & Consumer Commission (ACCC) announced today that a federal court has ordered PT Garuda Indonesia Ltd (Garuda) to pay penalties of (Aus.) $19 million (approximately U.S. $13 million) for colluding on fees and surcharges for air freight services. According to the announcement 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. For that, it was ordered to pay (Aus.) $15 million ($10 million), and a further (Aus.) $4 million ($2.75 million) was ordered for the imposition and level of insurance and fuel surcharges from Hong Kong.

According to the decision of the court, after more than nine years of litigation, the ACCC succeeded in demonstrating that Garuda implemented a number of understandings with other international airlines to impose various pre-determined surcharges on the supply of air cargo services from overseas ports to ports in Australia.

The case is a long running one. The ACCC commenced legal action against 14 international airlines between 2008 and 2010 under the Trade Practices Act (1974) for conduct that occurred between 2002 and 2006. 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. In June 2018, Air New Zealand was ordered to pay (Aus.) $15 million (U.S. $10 million) for fixing the price of fuel and insurance surcharges.

"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."

Attorneys: J.A. Halley, H. Younan, and J.L. Clark for Australian Competition and Consumer Commission. Justin Gleeson SC (Banco Chambers) and (Norton White) for PT Garuda Indonesia Ltd.

Companies: PT Garuda Indonesia Ltd.

MainStory: TopStory Antitrust

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