SIA Cargo to pay US$3.3 million fine in New Zealand for price fixing

The High Court has ordered Singapore Airlines Cargo (SIA Cargo) to pay a NZ$4.1 million (US$3.3 million) fine for price fixing in breach of the Commerce Act.

The company is the seventh airline to settle with the Commerce Commission in the long-running air cargo cartel case. SIA Cargo and Singapore Airlines were among the 13 airlines against which the commission charged, alleging they colluded to impose fuel and security surcharges for air cargo shipments to and from New Zealand.

Today's penalty judgment brings the total fines to NZ$25.475 million paid by British Airways, Cargolux, Emirates, Korean Air, Qantas and Japan Airlines International.

SIA Cargo admitted liability for agreeing fuel and security surcharges in Indonesia and Malaysia for cargo flown to New Zealand over a period of nearly four years from October 2001 (security surcharges) and from mid-2002 (fuel surcharges).

The penalty was recommended to the court by both the Commerce Commission and SIA Cargo as part of a pre-trial settlement which included a 20 per cent discount to recognise SIA Cargo's admissions. SIA Cargo was also ordered to pay costs to the commission.

The Commission agreed to discontinue its proceedings against Singapore Airlines, the parent of SIA Cargo as SIA Cargo took over Singapore Airlines' cargo operations in mid-2001.

Said Commerce Commission chairman Mark Berry: " Price fixing is unlawful and the fines imposed in the air cargo case should be a deterrent. The fines are also a reminder to companies that it is important to have effective compliance programmes in place to prevent anti-competitive behaviour."

SIA Cargo and Singapore Airlines were among the 13 airlines the commission filed proceedings against in December 2008, alleging that the airlines colluded to impose fuel and security surcharges for air cargo shipments to and from New Zealand.

Section 30 of the Commerce Act makes price-fixing agreements between competitors unlawful. This includes agreements with the purpose, effect or likely effect of fixing, controlling or maintaining prices, or that provide a mechanism for doing so. An agreement can be a formal document, such as a contract. An agreement can also be very informal.