ACCC v P T Garuda Indonesia Ltd [2016] FCAFC 42: ACCC Appeal Against Cartel Conduct Upheld
Tuesday 22 March 2016 @ 9.41 a.m. | Legal Research | Trade & Commerce
In a recent ACCC Media Release, it has been revealed that that the Full Court of the Federal Court (by majority), upheld an appeal by the Australian Competition and Consumer Commission (ACCC) in relation to air cargo cartel allegations.
Background to the Case
The ACCC had taken proceedings against 15 international airlines, including PT Garuda Indonesia (Garuda) (on 2 September 2009) and Air New Zealand Ltd (Air NZ) (on 17 May 2010), alleging the airlines had engaged in price fixing in relation to surcharges for the carriage of air cargo from origin ports outside Australia to destination ports within Australia.
Total fines of $98.5 million were imposed by the courts against the 13 airlines that settled, with the largest fine of $20 million, imposed on Qantas Airways.
On 31 October 2014, Justice Perram dismissed the ACCC’s proceedings against Garuda and Air New Zealand (see previous TimeBase article) on the basis that the conduct which he found otherwise would have contravened s 4E of the Trade Practices Act 1974 (Cth) (now called the Competition and Consumer Act 2010 (Cth)) (the Act) did not do so as it did not occur in a “market in Australia” as was required by the Act at the time of the conduct.
The ACCC appealed the decision to the Full Court of the Federal Court (see previous TimeBase article).
Garuda and Air New Zealand also lodged Notices of Contention against the decision in relation to whether the conduct occurred in a “market in Australia”, the agreements that were found to have been reached, as well as a broad range of other issues.
Findings of the Court
The Full Court of the Federal Court found that price fixing conduct engaged in by Garuda and Air NZ relating to the imposition of agreed surcharges on the carriage of air cargo from ports outside Australia to destinations within Australia took place in a “market in Australia”, and consequently breached Australia’s price fixing laws.
At [para 5], the majority of the Full Court held that:
“… all aspects of the market are relevant in determining whether it is in Australia,”
and that:
“… the presence of importers (customers) in Australia is not … irrelevant to the determination of whether the market is in Australia.”
Comment from the ACCC Chairman
The ACCC Chairman Rod Sims said of this judgment:
“The air cargo case is a very significant one for the ACCC, as it involved a substantial number of airlines engaging in price fixing conduct around the world. To date, 13 airlines have paid penalties totalling approximately $98 million for making and giving effect to price fixing agreements relating to the imposition of air cargo surcharges on cargo sent to Australia. Although it is no longer a requirement of our cartel laws that it be established that price fixing occurred in a market in Australia, this decision is significant because it confirms the ACCC’s view that the conduct by the airlines in fixing air cargo surcharges to be paid by Australian importers and ultimately passed on to Australian consumers, were caught by Australian competition laws.”
The Australian action is one of a number that has embroiled major airlines, including a US class action filed in 2006 on behalf of six freight forwarders and has been led by global litigation firm Hausfeld that has seen 26 carriers cut settlement deals totalling US$1.19 billion. In that case, Air New Zealand and Air India are the only carriers left defending the civil lawsuit.
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.
Sources:
Australian regulator wins appeal against Air NZ, Garuda over cargo cartel
ACCC appeal upheld in air cargo case – ACCC Release MR 32/16
ACCC v P T Garuda Indonesia Ltd [2016] FCAFC 42 (21 March 2016)
