Europe fines Qantas $12m over cartel behaviour

11 Nov 2010

Source: The Australian
EXECUTIVES could be jailed for 10 years for anti-competitive conduct of the kind for which Qantas has been fined in Europe.  ACCC chairman Graeme Samuel issued a warning after European regulators fined Qantas more than $12 million. Mr Samuel said yesterday that a $1 billion fine levied against airlines by the European Commission for fixing air cargo prices was a reminder of the price of collusion, which now included jail.

"You'd have to be a really stupid executive to be involved in cartel activity after July last year," Mr Samuel told the ABC. "What we've got here is, in a sense, a double problem that's occurred for the airlines involved. One is: they've had to pay significant penalties. The second is: serious reputational damage."

Despite Mr Samuel's stern warning, the penalty against Qantas was below expectations. The airline set aside $31m for potential penalties in Europe, as well as the still to be resolved regulatory action in New Zealand, and there had been speculation the fine would be tens of millions of dollars. Instead, the $12.3m fine was the second-lowest of the penalties levied against the 11 airlines and only a fraction of the $425.6m against Air France-KLM.

But the airlines' collective conduct was savaged by EU competition commissioner Joaquin Almunia, who said the price fixing began with co-ordination of a fuel surcharge and was extended after the September 11, 2001, attacks in New York to cover a security charge as well as a refusal to pay commission on those surcharges to freight forwarders.

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