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European Commission re-imposes cargo fines

BRUSSELS: March 17, 2017. The European Commission has renewed its decision to fine 11 airlines €776.46 million for operating an air cargo cartel between 1999 and 2006. A procedural error by the Commission led to the fine being annulled in December 2015 following an appeal to the General Court of the European Union.

The original total of €799.45 million applied by the Commission in November 2010 included a 12th airline - Qantas. However the Australian carrier did not appeal the decision and duly paid its fine.

Cargolux LUXThe Court annulled the Commission's fine after determining a discrepancy between the "reasoning and operative part" of its decision.

In its reasoning the Commission made the mistake of describing the cartel behavior as a single and continuous infringement covering all of the airlines, while its operative part suggested there were four separate infringements with only some airlines participating in all four.

Explaining the rationale to re-impose the fines after fixing its error, Competition Commissioner Margrethe Vestager said: "Millions of businesses depend on air cargo services, which carry more than 20 percent of all EU imports and nearly 30 percent of EU exports.

"Working together in a cartel rather than competing to offer better services to customers does not fly with the Commission. Today's decision ensures that companies that were part of the air cargo cartel are sanctioned for their behaviour," she declared.

The 12 airlines fined in 2010 were Air Canada (€21.03 million); Air France (€182.9 million); KLM (€127.1 million); British Airways (€104 million); Cargolux (€79.9 million); Cathay Pacific (€57.1 million); Japan Airlines (€35.7 million); LAN Chile €8.2 million); Martinair (€15.4 million); Qantas (€8.6 million); SAS (€70.1 million); and Singapore Airlines (€74.8 million). As whistleblowers Lufthansa and Swiss International Air Lines received full immunity.

With the exception of Martinair, the Commission said all the airlines face the same penalty as in 2010 when the Dutch subsidiary of Air France-KLM was fined 10 percent of its 2009 turnover. Since then the company's revenue has dropped "significantly" and the sanction is based on its 2016 turnover.

Responding to the new decision Cargolux said the development did not come as a surprise, and added: "At this stage Cargolux is reviewing the decision and has not yet decided whether to lodge an application for annulment with the General Court."

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