The European Commission has re-adopted its air cargo cartel decision, imposing largely the same fines on airlines for fixing the price of fuel and security surcharges as it first did in 2010 – and at least two defendants have already vowed to appeal again.
The European Commission’s Directorate-General for Competition announced fines of €776 million against 11 airlines on 17 March. It said the airlines agreed to fix prices of fuel and security surcharges covering flights into and from the European Economic Area between 1999 and 2006.
The re-adoption revises its original 2010 decision, which was mostly quashed by the EU’s General Court in 2015. The court had found discrepancies between the legally binding operative ground of DG Comp’s decision, and its extensive statement of facts.
The General Court overturned the decision fully for each of the airlines fined in 2010 – except for British Airways, where the court overturned its €104 million fine but left the decision in force; and for Qantas, which did not appeal against the DG Comp decision.
The enforcer has not withdrawn its first decision in relation to British Airways. In a European Court of Justice hearing in February, counsel to British Airways said DG Comp had refused to withdraw the original decision, and that it and the new decision would remain in force on an “inconsistent basis”.
DG Comp did not address the new decision to Qantas, as the original decision against it also remains in force. The enforcer cut Air France-KLM subsidiary Martinair’s €29.5 million fine to €15.4 million, after its turnover fell “significantly” since 2011. DG Comp again waived fines for Lufthansa and subsidiary Swiss International Airlines, because they blew the whistle on the cartel in 2005.
DG Comp said its new decision deals with the mistake the General Court identified in 2015, and brings the operative part in line with the competition authority’s factual findings. The enforcer said it maintains that the airlines participated in a cartel, and that the new decision remains “identical in terms of the anticompetitive behaviours” it targeted.
EU competition commissioner Margrethe Vestager said: “Millions of businesses depend on air cargo services, which carry more than 20% of all EU imports and nearly 30% of EU exports.”
“Working together in a cartel rather than competing to offer better services to customers does not fly with the commission,” she said. “Today’s decision ensures that companies that were part of the air cargo cartel are sanctioned for their behaviour.”
The new decision comes two months after DG Comp issued questionnaires to airlines involved in the case, indicating it was nearing a new adoption.
The enforcer did not issue a new statement of objections to the airlines, which could become an issue in potential appeals. European Court of Justice Advocate-General Nils Wahl in December 2016 said the ECJ should reject DG Comp’s re-adopted concrete rebar decision, as a failure to issue new charges in that case prevented the defendants from requesting an oral hearing.
SAS has said it plans to appeal against the new decision, and denied that it participated in “any global cartel”. The airline’s general counsel Marie Wohlfahrt said: “We strongly question the European Commission’s move to re-impose a decision that has already been annulled once”, and that the company “takes the competition rules extremely seriously”.
Air Canada said that "it has at all times respected all applicable laws with regard to competition. We intend to vigorously contest the European Commission's recent decision."
In a statement, Air France-KLM said it will “analyse the new decision, and the advisability of appealing it before the General Court of the European Union”.
Cargolux acknowledged the new decision and said it “did not come as a surprise,” as previous communications with DG Comp had “indicated its intention to re-adopt a decision in this case”, and said the airline has not yet decided whether to appeal.
A spokesperson for leniency applicant Lufthansa said: “We feel vindicated in our opinion that the decision from 2010 was not lawful.” He said the airline will examine whether there are “any reasons for us to take action against this new decision.”
British Airways said it has noted the decision and will be reviewing its position.
Cathay Pacific, Japan Airlines, LAN Chile parent LATAM Airlines and Singapore Airlines did not respond to requests for comment.
Counsel to Air Canada
Quinn Emanuel Urquhart & Sullivan
Partner Trevor Soames in Brussels
Julian Joshua in Washington, DC
Counsel to Air France-KLM
Partner Anne Wachsmann and counsel Sabine Thibault-Liger in Paris
Counsel to British Airways
Slaughter and May
Partner Anna Lyle-Smythe in Brussels is assisted by Emma Griffiths, Lorna Nsoatabe and Chris Deacon
Counsel to Cathay Pacific
Squire Patton Boggs
Partner Martin Rees in London is assisted by Erling Estellon and Lucy Venn
Counsel to Cargolux
Shearman & Sterling
Partner Geert Goeteyn in Brussels
Counsel to Japan Airlines
Van Bael & Bellis
Partners Jean-François Bellis, Kris Van Hove and Richard Burton in Brussels
Counsel to LAN Chile
Squire Patton Boggs
Partners Brian Hartnett and Oliver Geiss in Brussels
Counsel to Lufthansa
Latham & Watkins
Partner Sven Völcker in Brussels
Counsel to SAS
White & Case
Partner James Killick and counsel Genevra Forwood in Brussels are assisted by Aqeel Kadri
Counsel to Singapore Airlines and Singapore Airlines Cargo
Latham & Watkins
Partners John Kallaugher in London and Jean Paul Poitras and Javier Ruiz Calzado in Brussels