BA fined over cargo route price fixing

The European Commission today imposed a 104 million euros (about £90m) fine on British Airways for its part in cargo route price fixing involving a number of airlines.

The EC fine follows penalties inflicted on BA in America, Canada and Australia for the offence which involved fuel surcharges on international airfreight.

Air France and Dutch carrier KLM were among other airlines also fined today by the EC.

Air France was fined the most - 183 million euros (about £159 million) - and in total the airlines involved were fined nearly 800 million euros (about £700 million).

The Commission said BA and the other carriers coordinated their action on fuel surcharges over a period of six years.

"It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers," said European Competition Commissioner Joaquin Almunia.

"With today's decision the Commission is sending a clear message that it will not tolerate cartel behaviour."

The cartel operated from December 1999 to February 2006, said a Commission statement.

"The cartel arrangements consisted of numerous contacts between airlines, at both bilateral and multilateral level, covering flights from, to and within the EEA (European Economic Area).

"Airlines providing airfreight services primarily offer the transport of cargo to freight forwarders, who arrange the carriage of these goods including associated services and formalities on behalf of shippers."

The cartel began as a discussion between the airlines on fuel surcharges: "The carriers contacted each other so as to ensure that worldwide air freight carriers imposed a flat rate surcharge per kilo for all shipments.

"The cartel members extended their cooperation by introducing a security surcharge and refusing to pay a commission on surcharges to their clients (freight forwarders)."

The aim, said the Commission, was to ensure that all carriers applied the surcharges and that any increases or decreases of the surcharge levels were equally applied, in full, but all in the cartel.

"By refusing to pay a commission, the airlines ensured that surcharges did not become subject to competition through the granting of discounts to customers. Such practices are in breach of the EU competition rules," said the Commission statement.

The Commission said it set the levels of fines against the various airlines taking into account "the sales of the companies involved in the market concerned, the very serious nature of the infringement, the EEA-wide scope of the cartel and its duration".

All carriers received a fine reduction of 15% because of what the Commission called a "general regulatory environment in the sector which can be seen as encouraging price co-ordination.

Four carriers, including BA, were also granted a 10% reduction for their "limited participation" in the illegal cartel deal.

Lufthansa received full immunity under the Commission's "Leniency Programme", because it brought the cartel to the Commission's attention and provided "valuable" information.

The maximum fine the Commission could impose on any single carrier is 10% of their 2009 turnover.