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« Back to NewsAirlines liable to pay out millions to businesses following EC Decision on air freight cartel
Long awaited Commission decision paves way for damages claims against airlines to advance -
Pharmaceuticals, car parts, medical, fresh produce, electronics and other industries expected to claim millions for restitution of cartel overcharges
Hundreds of companies in Europe and around the globe are expected to join on-going damages claims against the world’s major airlines seeking restitution for overcharges levied by airlines during the operation of a worldwide air freight cartel, the existence of which was confirmed following an announcement by the EC’s Competition Commissioner Joaquin Almunia today.
The announcement follows a three year investigation by the EC into price-fixing and cartel activity in which investigators discovered a conspiracy by most of the world’s major airlines to fix the price of air freight services, including by means of a range of surcharges.
Litigation funding company Claims Funding International (CFI) has signed up companies from 11 European member states and commenced litigation on the 30th September 2010 against Air France-KLM and Martinair in the Netherlands, claiming in excess of €400m of damages.
Earlier, Hausfeld & Co LLP commenced proceedings against British Airways in the English High Court on behalf of two lead claimants 0n 18th September 2008. The lead claimants are seeking a declaration of the court as to BA’s joint and several liability to pay damages to all direct and indirect purchasers of air freight services from the cartelists. Hausfeld is also instructed by companies from across the globe, including some of Europe’s biggest brand names, who will be added to the High Court claim in due course if required.
On 14th July 2010 BA made an application to the court to add 34 additional co-cartelists to the High Court claim as contributors for the purposes of contributing towards the liability to claimants arising from the cartel.
CFI’s Managing Director, Peter Koutsoukis said:
“Today’s decision ends years of uncertainty. We know many companies have been awaiting the Commission’s decision. We expect many more will now sign up and the damages claimed therefore to increase significantly. Collectively, we expect the air freight cartel claims will be the largest ever civil claims for cartel damages in Europe and we intend to get our clients their money back.”
Anthony Maton, partner at Hausfeld & Co LLP said:
"Clearly we are delighted with the Commission’s decision which reflects cartel behaviour on an unprecedented global scale affecting a vast range of industries and businesses. Today's decision means that these airlines cannot now sensibly seek to avoid their liabilities. Our client’s action in the UK High Court now includes all of BA’s co-conspirators, and we are absolutely determined to seek financial redress on their behalf. We would now urge the airlines involved to seek sensible commercial resolutions of their liabilities or otherwise face determined litigation, costs exposure and reputational damage."
Separately, Hausfeld’s US practice has been instrumental in reaching settlements with Lufthansa, American Airlines, JAL, SAS, ANA and Air France-KLM with respect to their liabilities arising from the cartel for traffic to, from or within the US. These settlements, other than the Lufthansa settlement, cover direct purchasers of air cargo but do not cover purchases of air cargo made by shippers through freight forwarders, leaving the many European shippers with indirect purchases to, from, or within the US uncompensated for their loss arising out of the cartel.
However, now that the EC has reached its decision, the damages actions can proceed as ‘follow on’ actions based on the Commission decision. Article 16 of EU Regulation 1/2003 provides, ‘When National Courts rule on (decisions involving cartels) which are already the subject of a Commission decision, they cannot take decisions running counter to the decision adopted by the Commission’. This means that the victims will not have to prove to Courts in England or the Netherlands that the airlines are guilty of anti competitive conduct and the cases can precede effectively as ‘liability admitted’. It will still be necessary to prove the amount of loss caused by the cartel.
Between them CFI and Hausfeld separately represent more than €6bn of combined air cargo traffic purchased by shippers in the cartel period on multiple continents including several among the Fortune Global 500 and Forbes Global 2000 as well as both the Business Week and Interbrand 100 Best Global Brand. These companies have claims for compensation in Europe resulting from the loss they suffered as a result of the actions of the cartel.
The Commission has found that instead of letting market forces dictate prices for freight, the airlines conspired to fix prices. In addition, outside of Europe, 22 airlines have pleaded guilty to conspiring to fix prices between 2000 and 2007 (see list below).
More information on this case: Air Cargo
Practice Areas: Antitrust / Competition Litigation
Supporting Documents
» Airlines liable to pay out millions to businesses following EC Decision on air freight cartel
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