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Australia appeals against Air New Zealand

SYDNEY: Australia's Competition and Consumer Commission (ACCC) is appealing an October federal court decision to dismiss its action against Air New Zealand and Garuda in relation to their alleged involvement in an air cargo cartel.

The ACCC says it wants clarity as to how the country's Trade Practices Act 1974, Air New Zealandnow called the Competition and Consumer Act 2010, has been interpreted and applied by the court.

Prior to 2009 the act applied to competition in any "market in Australia". As the alleged contravention happened between 2001 and 2006, the trial judge concluded that their conduct did not take place in a "market in Australia" and therefore the law didn't apply.

In 2010, a crucial revision of the 1974 law made no distinction between inside or outside the country for companies engaged in price-fixing.

To add further complication, a recent review of competition policy - the 'Harper Review' – now recommends cartel provisions should only apply to such conduct that affect goods or services supplied or acquired "in Australian markets".

According to ACCC chairman Rod Sims, the commission's appeal is based solely on the court's conclusion that whatever Air New Zealand and Garuda did together, it obviously wasn't in Australia because it wasn't at a time when the revised law applied to them.

"It is important that we seek clarity on whether the act applies to the collusive arrangements identified by the court. This issue is also important in the context of the Harper Review Panel's recommendation that cartel provisions should only apply to cartel conduct affecting goods or services supplied or acquired 'in Australian markets,'" Sims added.

At the time of the court's ruling in October, Air New Zealand's general counsel John Blair commented: "This decision is important in aviation because international operators need clarity of the legal boundaries of the 'markets' in which they operate. The distinction between where competitive markets exist and where jurisdiction lies determines which regulators' requirements must be met. Respect for national sovereignty and legal jurisdiction has been a foundation of the aviation industry since 1919."

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