In December 2008, the New Zealand Commerce Commission commenced proceedings against 13 international airlines and eight airline executives, alleging the airlines colluded to raise the price of freighting cargo by imposing fuel surcharges on cargo shipments into and out of New Zealand. The conduct is alleged to have occurred over a period of more than seven years.
The first stage of the proceedings commenced on 11 May 2011 in the Auckland High Court and dealt with the question whether air cargo services inbound to New Zealand are part of a 'market in New Zealand' for the inbound air cargo services that the Commission alleges were the subject of price-fixing by the defending airlines such that the Commission can take action against the Respondents.
The airlines argued that for cargo inbound to New Zealand the competition between the airlines occurred only at overseas ports of origin and not in New Zealand, and that for these reasons the Commission's inbound price-fixing claims were outside the reach of the Commerce Act.
Jurisdiction regarding outbound air cargo was not disputed.
On 26 August 2011, the Court decided that inbound air cargo services were supplied in a market in New Zealand, and that the Court had jurisdiction to hear the Commission's case in full. The Court held that it was sufficient that part of the market is situated in New Zealand, noting that it "[saw] the fact that part of the service takes place in New Zealand as an important facet of the reality that part of the market is in New Zealand". In this case, the arrival and handling of cargo in New Zealand, and the demand for cargo shipments from New Zealand importers, were key factors in the Court's finding that a market exists here for inbound cargo services.
In its judgment, the Court rejected the airlines' argument that competition between the airlines stopped at the moment the cargo contracts were entered into at ports of origin, and found that such a narrow analysis "does not seem ... in accord with the facts and common sense".
The remainder of the case is scheduled to begin in July 2012 and will deal with the Commission's allegations of price fixing.
See Commerce Commission Media Release.