British Airways Fined $4.5 Million for Price Fixing on Canadian Air Cargo

Strategic Insights -

Canadian authorities have accused British Airways of participating in a cartel that fixed prices on Canadian air cargo, resulting in undue reduction of competition. The airline admitted to fixing surcharges on certain international air cargo routes from Canada between April 2002 and February 2006. As part of an investigation by Canada's Competition Bureau, several other airlines have also admitted to price fixing, including Air France, KLM, Martinair, and Qantas. The fines for price fixing in Canada include a maximum $10 million fine per instance, coupled with five years in prison, penalties that will increase to $25 million and 14 years in prison with changes to the law taking effect on March 10, 2010.

Key Takeaways:

  • British Airways has agreed to pay $4.5 million in fines for participating in a cartel that fixed prices on Canadian air cargo.
  • The cartel fixed surcharges on certain international air cargo routes out of Canada between April 2002 and February 2006.
  • The airlines involved in the cartel communicated with competitors about the amount and timing of fuel surcharges.
  • Fines paid now total $14.6 million, and the investigation is not finished.
  • The airline co-operated fully in the investigation.
  • Under Canadian law, the penalties for price fixing include a maximum $10 million fine per instance, coupled with five years in prison.
  • The law will raise the maximum penalties to $25 million and 14 years in prison on March 10, 2010.
  • The investigation highlights the Bureau's commitment to uncovering anti-competitive agreements that harm Canadians.

Statistics:

  • $4.5 million: the amount British Airways agreed to pay in fines for participating in the cartel.
  • $14.6 million: the total amount of fines paid by all airlines involved in the investigation so far (including British Airways).
  • April 2002 – February 2006: the period during which the cartel fixed prices on Canadian air cargo.
  • $10 million: the current maximum fine per instance of price fixing in Canada.
  • 5 years: the current maximum prison sentence for price fixing in Canada.
  • $25 million: the new maximum fine per instance of price fixing to take effect on March 10, 2010.
  • 14 years: the new maximum prison sentence for price fixing to take effect on March 10, 2010.

Sources:

  • CBC News: no date provided
  • Canada's Competition Bureau: no date provided