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Airline Case May Hit Infotech Goods Pricing Down Under

In a move that may affect pricing of many information-technology goods imported into Australia from Asia, the High Court of Australia has found that price-fixing agreements entered into between Air New Zealand, Garuda and other international airlines, which occurred between 2002 and 2006, breached Australia’s competition law.

“This is a significant win for the ACCC in the long-running, highly contested air cargo cartel proceedings,” said Sarah Court, a commissioner at the Australian Competition and Consumer Commission.

Many IT goods sold in Australia arrive by air-freight from Hong Kong or Singapore – and not all travel with Qantas.

The ACCC originally took action against Air NZ in 2009 and Garuda in 2010, alleging they colluded with other airlines on charges for fuel, security, insurance surcharges, and a customs fee, for the carriage of air freight from Hong Kong, Singapore and Indonesia to destinations in Australia.

Under the law as it then stood, the ACCC was required to establish that the conduct occurred in a “market in Australia”.

The High Court dismissed appeals by each airline and held that all aspects of the market, including the presence of customers in Australia, need to be considered in deciding whether a market is actually “in Australia’.

“Today’s judgment sends a clear message that the ACCC is committed to pursuing cartel conduct that impacts on Australian business and consumers,” said commissioner Court.

It notes that between 2008 and 2010, the ACCC took proceedings against 15 international airlines. Of these, 13 airlines settled, with Federal Court judges imposing penalties totalling $98.5 million.

Qantas was the main contributor at $20 million, followed by Singapore ($11.75m), Cathay ($11.25m), Emirates ($10m), Thai ($7.5m) and Malaysian and Air France ($6m each). Airlines in the $5m bracket included British Airways, Cargolux, Martin Air, JAL and Korean.

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