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EU fines freight forwarders €169 million

By control on March 28, 2012

The European Commission has levied €169 million in fines to 14 freight forwarding groups for conspiring to fix cargo surcharges, among other activities, from 2002 to 2007. The U.S. Department of Justice has so far slapped 22 carriers and 21 airline executives with similar charges.

The EC cited four types of cartels that operated during the five-year period: the new export system cartel, the advanced manifest system cartel, the currency adjustment factor cartel and peak season surcharge cartel. According to a press release issued by the EC, the most collusion occurred on the Europe-to-U.S. and China/Hong Kong-Europe trade lanes.

Cartel participants included Kuehne + Nagel, Schenker Ltd., UTi Worldwide, UPS Supply Chain Solutions, Panalpina World Transport Ltd., and other global freight forwarding entities. DHL parent company Deutsche Post received full immunity from fines for its cooperation.

Joaquín Almunia, the EC’s vice president of competition policy, defended the fines imposed on the freight forwarders, commenting that the cartels had far-reaching consequences. “In times of crisis, it is all the more important to stamp out the hidden tax that cartels impose on our economy,” he said in a statement. “These cartels affected individuals and companies shipping goods on important trade lanes.

“Many European exporters and consumers of imported goods may have been harmed as a result,” Almunia continued. “Companies should be aware that crossing the line and colluding on prices comes at a high price, as [this] decision illustrates.”

Price-fixing came a particularly high price for Kuehne + Nagel, according to a press release issued by the Swiss logistics company. The EC fined K + N €53.7 million for participating in all four cartels defined by the EU prior to 2007.

Kuehne + Nagel International AG Chairman Karl Gernandt spoke out about this fine, vowing to “carefully consider” the EC’s charges. However, he raised some concerns about the agency’s investigation and conclusions, calling the latter erroneous.

“In addition, Kuehne + Nagel’s comprehensive cooperation throughout the investigation was not adequately acknowledged,” Gernandt said in a statement. “That is why we take into consideration to appeal against the decision before the European courts.”

K + N paid the DOJ $9.8 million in a plea deal resulting from the same charges in 2011.

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