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US: Airlines fined $504m in US probe

Five airlines have agreed to pay fines totalling $504m (253m) for conspiring to fix prices for air cargo rates, the US Justice Department says.

June 26th, 2008

The airlines include Air France and KLM, now operated by a single holding company, which is to pay $350m.

The other airlines involved are Cathay Pacific, Dutch airline Martinair and Scandinavia's SAS.

The payments come after a wide-ranging inquiry into the air cargo industry by the department's anti-trust division.

A statement by the department said the fine imposed on Air France-KLM was the second-highest levied in a criminal anti-trust prosecution to date.

Blow to consumers

During the period between 15 May 15 2001 and February 2006, the airlines met and agreed cargo shipment rates and levied rates in accordance with those meetings.

"The airlines each engaged in a conspiracy to suppress and eliminate competition by fixing the cargo rates charged to customers for international air shipments," the department said.

"The charged conduct affected billions of dollars of consumer and other goods - including produce, clothing, electronics and medicines - shipped by these airlines and their competitors in the air cargo industry."

Ultimately, consumers paid higher prices as a result, the department said.

"When these companies and their co-conspirators got together and agreed to raise prices for air cargo shipments, American businesses and consumers ended up picking up the tab," said Scott D Hammond, deputy assistant attorney general in charge of criminal enforcement for the department's anti-trust division.

Fuel surcharges

The statement added that the airlines had agreed to co-operate with the Department of Justice investigation, which was continuing, and that the plea agreements were subject to approval by the US district court where the charges had been filed.

Of the other three airlines involved, Cathay has agreed to pay $60m, Martinair $42m and SAS $52m.

The penalties are the latest in a series of fines arising from the Justice Department's investigation into price-fixing in the air industry.

In August 2007, British Airways was fined $300m after admitting collusion in fixing the price of cargo rates for international air shipments and the rate of passenger fuel surcharges.

Other airlines, including Korean Air Lines, Qantas and JAL, have since suffered similar penalties.

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