Airlines settle price fix case

June 26, 2008 10:38:39 AM PDT
Four international airlines have agreed to pay $504 million in fines to settle charges they conspired to fleece consumers by driving up cargo shipping prices. The Justice Department called the case one of the largest antitrust settlements in U.S. history.

Associate Attorney General Kevin O'Connor called the scam an "international price-fixing cartel" that cost consumers hundreds of millions of dollars between 2001 and 2006. In some instances, for example, fuel surcharges rose by 1,000 percent.

One of the four airlines - Air France-KLM - has agreed to pay $350 million of the total settlement. The other carriers are Cathay Pacific Airways, Martinair Holland and SAS Cargo Group "American consumers and taxpayers pour billions of dollars each year into the pockets of these lawbreakers," said FBI Assistant Director Joe Persichini. "Let there be no mistake that people in corporations that take consumers and taxpayers in this way are thieves."

Authorities said executives from each of the airlines met repeatedly in the United States, Europe and Asia to cook up a price-fixing scheme that raised cargo rates, fuel surcharges and security costs for businesses and, ultimately, consumers. The cartel focused on goods shipped to and from the United States, including electronics, clothing, produce and medicines, O'Connor said.

The settlement agreement, filed Thursday in U.S. District Court in Washington, still requires a judge's approval.

Thursday's announcement marked the latest in a series of cargo shipping settlements over the last two years. Earlier, British Airways, Korean Air, Qantas and Japan Airlines filed similar agreements as part of the investigation.

In all, airlines have agreed to pay $1.2 billion in fines - what O'Connor called "the highest total amount of fines ever imposed in a criminal antitrust investigation."

The investigation is continuing.


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