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Garuda Indonesia is the latest freight carrier to be found to have colluded

Peter Lee

In Australia, 14 airlines have been found to have colluded to fix prices for freight. The latest to be brought to book is Garuda Indonesia and the penalties are substantial.

The Australian Federal Court has ordered PT Garuda Indonesia Ltd (Garuda) to pay penalties of AUD19 million for colluding on fees and surcharges for air freight services. A penalty of a further AUD4 million was ordered for the imposition and level of insurance and fuel surcharges from Hong Kong.

The penalties follow the Australian Competition and Consumer Commission’s court action against a global air cargo cartel, which has so far resulted in penalties of AUD132.5 million against 14 airlines, including Air New Zealand, Qantas, Singapore Airlines and Cathay Pacific.

The Court found that between 2003 and 2006, Garuda made and gave effect to agreements that fixed the price of security and fuel surcharges, as well as a
customs fee from Indonesia. It was ordered to pay AUD15 million.

“We are committed to pursuing cartel conduct from both domestic and overseas operators. said ACCC Chairman Rod Sims.

This case has been a trial in more ways than one: in 2014, the Federal Court initially dismissed the ACCC’s case against Air New Zealand and Garuda. The
ACCC appealed the decision and the Full Court of the Federal Court upheld the ACCC’s appeal.

Garuda and Air NZ appealed the decision to the High Court, which unanimously dismissed the appeal. Garuda has also been ordered to pay the ACCC's costs.

The ACCC commenced legal action against 14 international airlines between 2008 and 2010 under the Trade Practices Act (1974) for conduct that took place between 2002 and 2006.

All goods imported to Australia during the period by the airlines subject to ACCC litigation were affected by the illegal price agreement including car
parts, electronics, vegetables, seafood, flowers and, in one specific circumstance, meat to Australian troops in the Middle East.

Competition regulators around the world have taken action in relation to the air cargo cartel, with fines or penalties ordered against various airlines in Europe, the United States, Korea, New Zealand, Canada, and India.

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