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Australia drags Garuda to court
The Australian Consumer and Competition Commission (ACCC) has filed a lawsuit against national carrier Garuda Indonesia over allegations that it may have conspired with other airlines to fix air freight cost prices
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he Australian Consumer and Competition Commission (ACCC) has filed a lawsuit against national carrier Garuda Indonesia over allegations that it may have conspired with other airlines to fix air freight cost prices.
The lawsuit comes as part of a fully fledged investigation that started last year with allegations of possible price fixing involving major players in the airline industry.
In a statement released on Wednesday, ACCC accused Garuda of entering arrangements with other international air cargo carriers in Hong Kong and Indonesia between 2001 and 2006 involving price fixing for fuel and security surcharges.
A hearing has been scheduled on the lawsuit against Garuda on Oct. 22 at the Sydney Federal Court, which will make the Indo-nesian firm the 10th airline to be taken to court by the consumer watchdog.
To date, the court has ordered a total of US$41 million in penalties against offenders.
On Dec. 11, 2008, the court ordered Qantas Airways Limited and British Airways PLC to pay penalties of $20 million and $5 million respectively.
On Feb. 16 the court ordered Air France, Koninklijke Luchtvaart Maatschappij NV (KLM), Martinair Holland NV and Cargolux International Airlines SA to pay penalties of $3 million, $3 million, $5 million and $5 million respectively.
The court is also starting proceedings against Singapore Cargo Pte Ltd, Cathay Pacific Airways Ltd and Emirates.
According to the Wednesday statement, ACCC was seeking injunctive relief, pecuniary penalties, and costs on Garuda’s alleged involvement, whilst it would continue to investigate other airlines along with cooperating parties.
“Further actions are expected during the next few months,” the statement says.
Garuda spokesperson Pujobroto denied the allegations.
He confirmed however that the company did apply a security surcharge for cargo services in
Australia, but not with reference to other airlines. Prices were “applied on a completely separate basis,” he said.
Pujobroto said the company was still assessing legal steps to counter the lawsuit. Other non-Australian airlines that have been dragged to court by ACCC have argued that the competition watchdog does not have jurisdiction over them because air cargo flown to Australia from overseas was beyond
the definition of a “market in Australia” under the country’s Trade Practices Act.
The air freight industry has been investigated by regulators in various countries, namely Australia, the US and the UK during the past two years, with more than 30 airlines facing scrutiny.
In Nov. 2007 the US Department of Justice fined Qantas $61 million after it pleaded guilty to involvement in a six-year price-fixing cartel on the trans-Pacific route, and so far 11 airlines have admitted to some collusion on pricing.
