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Air France-KLM fined $350 million

French-Dutch airline company Air France-KLM was ordered by the US Justice Department to pay $350 million for fixing air cargo prices in the US. Cathay Pacific, Danish carrier SAS and Martinair Holland were also charged.

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Four major airlines, including Air France-KLM and Cathay Pacific Airways, have agreed to pay US criminal fines totalling 504 million dollars to settle charges they conspired to fix air cargo prices, officials said Thursday.

 

The US Justice Department said a subsidiary of Danish carrier SAS and Martinair Holland had also agreed to plead guilty to similar charges as part of an ongoing probe tied to a multiyear conspiracy.

 

"This price-fixing conspiracy undermines our economy and harms the American people who, due to lack of true competition in this area, end up footing the bill," said Kevin O'Connor, an associate US attorney general.

 

Air France-KLM will pay the largest fine among the four airlines charged, totalling 350 million dollars. Officials said the penalty was the second highest ever applied in a US criminal antitrust investigation.

 

Justice Department officials said the airlines conspired to "suppress and eliminate" competition by fixing cargo freight rates charged to customers for international air shipments.

 

"As part of the conspiracy, several companies and their co-conspirators artificially raised the price to ship into and out of the United States consumers goods of all types," O'Connor said.

 

Officials said the conspiracy affected billions of dollars of consumer and other goods shipped by the airlines, including produce, electronics and medicines, over several years.

 

"Air France is committed to compliance with all laws, including US antitrust laws. We have taken thorough steps across the organization to prevent recurrence, as Air France is committed to the highest standards of corporate governance," the chief executive of Air France-KLM, Jean-Cyril Spinetta, said in a statement.

 

Hong Kong-based Cathay Pacific agreed to pay a 60-million-dollar fine, while SAS will pay a 52-million-dollar penalty and Martinair will pay a 42-million-dollar sanction.

 

The Justice Department has already charged other major airlines as part of its widening dragnet into the air cargo conspiracy.

 

A former high-ranking executive of Australia's Qantas Airways, Bruce McCaffrey, is serving an eight month jail term in the United States for participating in illegal price-fixing.

 

The wider US investigation has tarnished the reputations of other large airlines around the world.

 

Japan Airlines pleaded guilty in April to air cargo price-fixing charges and was sentenced to pay a large 110-million dollar criminal fine.

 

In August of last year, British Airways and Korean Air Lines pleaded guilty to being involved in improperly fixing air cargo rates. Both airlines also paid hefty US fines.

 

Officials said Air France and KLM Dutch Airlines had been operating as separate airlines when their conspiracy was hatched in 2001. The two carriers merged into Air France-KLM in 2004 and integrated their cargo shipment operations.

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