This may have been a stagnant year for cargo carriers, but at least nine of them may soon get a hefty Christmas present from the European General Court. In a rather surprising reversal, the court ruled against the European Commission on Wednesday, annulling nearly €800 million in fines that had been levied against the cargo carriers for their alleged anticompetitive price-fixing activity between 2006 and 2010.
Ruling that the “grounds and the operative part” of the EC’s decision to fine the carriers were “contradictory,” the court rejected the EC’s argument that there was “a single and continuous infringement of EU competition rules” involving all carriers named in the lawsuit for the entire time period in question.
The airlines in the Dec. 16 decision that had been accused of colluding to determine fuel surcharges and other freight forwarding fees include: Air France-KLM, British Airways, Cargolux Airlines International, Cathay Pacific Airways, Deutsche Lufthansa, Japan Airlines, LATAM Airlines, Martinair Holland, SAS Cargo Group and Singapore Airlines. Fines totaling €790 million were levied by the EC against all of the defendants, except for Lufthansa and its subsidiaries, which were granted immunity.
According to the General Court, “the operative part of the decision mentions four infringements, relating to different periods and routes. Whereas some of the infringements were found to have been committed by all the carriers concerned, others were found to have been committed by a more limited group of carriers.” However, this language “goes against the idea set out in the grounds of the decision of there being a single and continuous infringement composed of a complex of anticompetitive conduct for which all the participants are liable, irrespective of the routes concerned.”
The court also noted that “the grounds of the contested decision themselves are not entirely internally consistent. Indeed, those grounds contain assessments which are difficult to reconcile with the existence of a single cartel covering all of the routes referred to in the operative part.” These internal inconsistencies in the contested decision, the court ruled, “were liable to infringe the applicant’s rights of defense and prevent the court from exercising its power of review.”
In response to the General Court’s reversal, LAN Cargo, the cargo arm of LATAM Airlines, said it had “fully collaborated with the applicable authorities over the years of the investigation” and wanted to “reaffirm once again its commitment to strictly comply with the applicable laws of the countries where it operates.” Under the original EC decision, LATAM would have faced €8.2 million in fines.
Another defendant, Cargolux, which had been charged with nearly €80 million in EC fines, also issued a statement about the ruling, saying it “welcomes the decision of the General Court,” adding that it will “conduct a detailed analysis of the court’s decision.”
Sweden-based carrier SAS, which was facing a €70 million fine, stated that, even if the EC appeals the General Court’s ruling, “SAS will continue to vigorously defend itself.” The carrier added that it “will now review the judgment to determine any further action, particularly in relation to the ongoing civil damages cases, which are largely based on the European Commission’s decision that has now been annulled.”
The carrier that would have faced the highest EC penalties was Air France-KLM, which had been fined nearly €380 million before the annulment was announced. British Airways (now part of IAG Group) also faced a nine-figure fine of €104 million, but that, too, was annulled.