Background
Multi-billion dollar antitrust / cartel class action lawsuits have been filed in the United States, Canada and the United Kingdom alleging price-fixing of rates for airfreight shipping services by dozens of major international airlines. The Plaintiffs claim that the Defendants conspired to fix prices of airfreight shipping services between January 1, 2000 and September 11, 2006 engaged in a conspiracy to fix, raise, maintain or stabilize the prices of airfreight shipping services by coordinating surcharges (fees that air cargo carriers charge in addition to normal shipping rates for specific extra costs, such as “fuel surcharge” or a “security surcharge”), jointly agreeing to eliminate or prevent discounting of prices, agreeing on yield and allocating customers, all in violation of antitrust laws. As a result of the conspiracy, air shipping charges worldwide appear to have been inflated by about 10% on average.
A number of regulators around the world, including the US Department of Justice (US DOJ) and the Commission of the European Communities (EU Commission), have been investigating price-fixing in the air cargo industry. The US alone has so far imposed fines of more than $1.6 billion on 18 airlines and filed criminal charges against 14 airline executives for price fixing.
Air Cargo Litigation In Europe
Emerald Supplies, Ltd., et al. v. British Airways, Plc, pending in the High Court of Justice in the UK.
Proceedings were commenced in London against British Airways on behalf of an initial cohort of some 160 shippers alleging that the carrier breached European and UK competition laws by acting as part of a cartel that fixed fuel security and surcharge prices against some of its air freight customers. The Emerald action was commenced against BA on a joint and several liability basis – that is they are liable for the whole loss arising from the cartel and not just the harm to its own customers. As a result BA has now brought 32 other airlines (i.e. the rest of the cartel members) into the proceedings to share the cost of any potential damage award.
To participate in the UK action, claimants must have suffered a loss. For indirect purchasers, this means that the fuel surcharge over-charge must (a) have been passed on to them by a freight forwarder or other intermediary, if one was used, and (b) absorbed by them in whole or part and not passed on further down the supply chain. Shippers, not forwarders, have the primary claim in the UK because they paid the overcharge. The damages sought in the UK action are those in relation to all air freight purchases for freight traffic within, out of, or into the EU between December 1999 and March 2006.
On the basis of the guilty pleas by key airlines and executives in the US together with the ongoing EU Commission proceedings, it is believed that substantial compensation will be paid to those who participate in the European action.
On November 9, 2010, the European Union fined 11 airlines $1.1 billion for their role in a global cartel that colluded to fix air cargo rates. Air France-KLM was fined $476 million; British Airways was fined $145.6 million; Singapore Airlines was fined $104.7 million; SAS was fined $98.3 million; Cathay Pacific was fined $80 million; Japan Air Lines was fined $50 million; Martinair was fined $ 41.3 million; Air Canada was fined $29.4 million; Qantas and LAN Chile were both fined approximately $12 million.
Air Cargo Litigation In The United States
In re Air Cargo Shipping Services Antitrust Litigation, pending in federal court in New York.
In parallel with the US DOJ proceedings, civil plaintiffs have also commenced a price-fixing class action in the US against the following airlines in relation to the provision of international airfreight services since January 1, 2000:
China Airlines
American Airlines
EVA Airways
Air India
AC Cargo LP
Aerolinas Brasileiras S.A. (d/b/a Absa Cargo Airline)
Air Canada
Air China Cargo Company, Ltd. (d/b/a Air China Cargo)
Air China Ltd. (d/b/a Air China)
Air Mauritius Ltd.
Airways Corporation of New Zealand Ltd. (d/b/a
Airways New Zealand)
Alitalia Lines Aeree Italiane S.p.A.
All Nippon Airways Co., Ltd.
Asiana Airlines, Inc.
Atlas Air Worldwide Holdings, Inc.
British Airways PLC
Cargolux Airlines International S.A.
Cathay Pacific Airways Ltd.
DAS Air Ltd. (d/b/a Das Air Cargo)
El Al Israel Airlines
Emirates Airlines (d/b/a Emirates)
Ethiopian Airlines Corp.
Deutsche Lufthansa AG
Japan Airlines International Co., Ltd.
Kenya Airways Ltd.
KLM Royal Dutch Airlines
Korean Airline Co., Ltd.
LAN Airlines S.A. (f/k/a LAN Chile S.A.)
Lan Cargo S.A.
Lufthansa Air Cargo AG
Malaysia Airlines
Martinair Holland N.V.
Nippon Cargo Airlines Co., Ltd.
Polar Air Cargo, Inc.
Qantas Airways Ltd.
Scandinavian Airline Systems AB
Saudi Arabian Airlines Ltd.
Singapore Airlines Cargo PTE, Ltd.
Singapore Airlines Ltd.
Société Air France
South African Airways (Proprietary) Ltd.
Swiss International Air Lines, Ltd.
Thai Airways International Public Co., Ltd.
Viação Aérea Rio-Grandense S.A. (“VARIG”)
To date, the following settlements have occurred; Lufthansa - $85mm; (The filing deadline for this settlement was February 12, 2009); Air France/KLM - $87mm; SAS Cargo - $13.93mm; Japan Air - $12mm; American Airlines - $5mm; All Nippon - $10.4mm; Cargolux - $35.1mm; Qantas - $26.5mm; and Thai Airways - $3.5mm. The filing deadline for these settlements was July 26, 2011.
British Airways PLC has agreed to pay $89.5mm; LAN Airlines SA has agreed to pay $66mm; Malaysia Airlines has agreed to pay $3.2mm, South African Airways has agreed to pay $3.3mm, Saud Arabian Airlines Ltd. has agreed to pay $14mm, Emirates has agreed to pay $7.833mm, and El Al has agreed to pay $15.8mm. No filing deadline has yet been established for these settlements.
With additional defendants expected to reach settlements in the upcoming months, it is anticipated that the total aggregate settlements in the US action alone could exceed US$1 billion.