Singapore Air fined for troop meat price fix

Singapore Airlines and Cathay Pacific have copped fines of $23 million between them for their part in a global air freight cartel, which included attempts by the Singaporean carrier to fix prices for transporting meat to troops in the Middle East.

The latest fines take to $91 million the total amount airlines including Qantas have been penalised in Australia for the illegal activity.

The fine imposed on Singapore Airlines’s cargo unit comes after it admitted to attempting to fix rates with Malaysia Airlines for meat exports to US and Australian troops stationed in the Middle East.

The attempt to illegally fix those charges in January 2003 followed the US’s decision to deploy about 35,000 troops to the Middle East, just prior to the invasion of Iraq. At the time, the Australian government had also decided to send additional military personnel to assist in Iraq.

Singapore Airlines had anticipated that the build-up of troops would lead to increased demand for the air freight of meat from Australia to feed the troops in the Middle East.

In the latest chapter in the unravelling of the cartel, the Federal Court in Sydney has ordered Singapore Airlines and Cathay to pay fines of $11.75 million and $11.25 million respectively.

After Qantas’s fine of $20 million in 2008, the penalties imposed on the two Asian airlines are the second and third highest in Australia for illegally ramping up freight charges in concert with other airlines.

Last month Emirates was fined $10 million for fixing fuel prices, a security surcharge and a customs fee on freight carried from Indonesia to Australia and other countries between October 2001 and May 2006.

Australian Competition and Consumer Commission chairman Rod Sims said today that the ‘‘sheer scale of the penalties will act as a strong deterrent’’ to any business considering cartel activity.

The competition regulator began legal action against Singapore Airlines and Cathay Pacific in 2008 and 2009 respectively.

Part of the fine against Singapore Airline relates to its admission that it fixed surcharges for fuel, security and customs fee for freight services from Indonesia to Australia.

The fine against Cathay comes after it admitted that it attempted to come to an arrangement with Qantas for rates for freight services between Hong Kong and Australia.

In September 2004 Cathay was operating a weekly 747 jumbo freighter between Hong Kong and Sydney, whose competitive position was threatened by a new Qantas service.

Cathay proposed that Qantas increase its price by 25 per cent to the level it was charging.

The ACCC also has legal action under way against Air New Zealand and Garuda Indonesia.

Last year Qantas closed the door on a dark period in its corporate history after reaching a settlement in New Zealand to pay its fifth fine for illegally fixing prices in its freight operations.

It took the total penalties the Australian airline had copped worldwide to more than $105 million.

The episode not only dented Qantas’s earnings but resulted in one of its American freight executives, Bruce McCaffrey, serving six months in jail in the US.

The global cartel originated in 1996, when at least 17 airlines, including Qantas, introduced freight levies on air cargo to counter rising jet fuel costs.

Source:  brisbanetimes