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European Union

EU Fines Airlines $1.1 Billion for Price-Fixing Cartel

Strategic Insights

— 1 min read

The European Union's competition watchdog, the European Commission, has fined 11 airlines a total of almost $1.1 billion for colluding on fuel and security surcharges on international cargo shipments between 1999 and 2006. This cartel led to higher prices for businesses to move their goods. The commission's investigation stopped the cartel in 2006, and the airlines coordinated their pricing without discounts, harming European businesses and consumers. The fines range from 21 million euros to 310.1 million euros, with Air France-KLM receiving the largest fine.

Key Takeaways:

  • The European Commission fined 11 airlines a total of almost $1.1 billion for fixing prices on international cargo shipments.
  • The cartel operated from December 1999 to February 2006, resulting in higher prices for businesses to move their goods.
  • The airlines, including Air Canada and Air France-KLM, coordinated their action on surcharges for fuel and security without discounts.
  • Lufthansa escaped a fine as it blew the whistle on the cartel, and 11 other carriers and one consultancy were dropped from the charges.
  • Air Canada, which took a $125-million provision related to the investigation, said it was fined just over 21 million euros, the equivalent of $29.4 million.
  • The commission's decision sends a clear message that it will not tolerate cartel behavior and may encourage individual countries to impose criminal charges.
  • The U.S. Department of Justice has already charged 18 airlines and several executives in its investigation of the cargo cartel and imposed more than $1.6 billion US in fines.

Statistics:

  • Total fine: almost $1.1 billion
  • Range of fines: 21 million euros to 310.1 million euros
  • Time period of cartel operation: December 1999 to February 2006
  • Number of airlines fined: 11
  • Number of airlines dropped from charges: 11
  • Number of executives charged by U.S. Department of Justice: several
  • Total fines imposed by U.S. Department of Justice: more than $1.6 billion US

Sources:

  • Gabriele Steinhauser; The Associated Press
  • The European Commission
  • The Canadian Press
  • The Waterloo Region Record

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