ComCom Prosecuting Top Airlines Over Price-Fixing

By VAN DEN BERGH, Roeland

THREE international airlines, including giants Singapore Airlines and Cathay Pacific, are facing criminal charges for allegedly failing to provide information for a price-fixing investigation.

The Commerce Commission is filing the charges in Auckland District Court alleging that three airlines, including Aerolineas Argentinas, did not comply with a demand for information and documents relating to their air-freight businesses.

The commission is investigating allegations that airlines, including Air New Zealand, colluded for years in setting cargo rates, including fuel surcharges, in the $400- million New Zealand international air-freight market.

Commission chairwoman Paula Rebstock said the airlines could not refuse the request made last in October under the Commerce Act to provide the information within a month.

The airlines face fines of up to $30,000 each if found guilty.

Singapore Airlines Cargo and Cathay Pacific both said they had provided all documentation relating to their New Zealand operations, but that the commission was exceeding its jurisdiction by also demanding information on operations in other countries.

Both airlines said they would vigorously defend the charges.

Aerolineas Argentinas did not respond to a request for comment.

Hong Kong’s Cathay Pacific said it was disappointed and concerned by the commission’s decision to involve it in a test case seeking extra- territorial investigative and judicial powers.

Singapore Airlines Cargo said the commission’s request would require the airline to provide information from 39 countries.

A similar dispute with the Australian Competition and Consumer Commission was before courts.

The New Zealand investigation is part of a global action involving jurisdictions including the United States, Europe and Australia — and 30 airlines. Several airlines have paid out US$1.2 billion in penalties in the US, including Qantas which paid US$61 million (NZ$76.3 million) in November and has made provisions for another A$64 million (NZ$80.9 million) to cover actions in Australia, New Zealand and Europe. Class actions were also being brought, including one in Australia on behalf of international freight customers.

“Cartels are insidious and cause extensive damage to the New Zealand economy,” Ms Rebstock said.

“They are difficult to detect and extremely difficult to investigate because of their secretive nature.”

If the investigation found any airlines had broken the law, the commission would file proceedings in the High Court later this year.

Air New Zealand says it has not found evidence of wrongdoing in its freight business and has not made provision for possible fines or penalties.

The commission raided Air New Zealand’s office in September 2006.

Neither the commission nor the airline have confirmed what the search was for, but it is widely understood to relate to the air- freight investigation. Air New Zealand said at the time that the commission’s investigation was “related to a small part of the company’s business before 2001″.

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