A group of airlines, including British Airways and Cathay Pacific, have largely lost their legal challenge to almost €520 million ($614 million) in fines over their long-running cartel to coordinate fuel and security surcharges on air cargo services.
The European Court of Justice ruled in 10 judgments handed down on Thursday that the European Commission was right to find that the airlines should be penalized for creating and running the six-year-long air freight cartel dating back to the 1990s.
The challenges came from LATAM Airlines, British Airways, Singapore Airlines and Japan Airlines, alongside Cathay Pacific, KLM, Cargolux and SAS. Lufthansa also lodged an appeal, having avoided a fine by reporting the cartel.
The court rejected the airlines' common argument that the commission lacked the jurisdiction to sanction conduct that related to inbound freight services.
SAS Cargo Group and two of its units were the only airlines to partially succeed in their appeals. The ECJ reduced the total fines imposed on SAS to roughly €62.8 million, down from about €70 million.
SAS Cargo had argued that the General Court, when it reviewed the commission's fines, made an error in law when calculating an adjustment for the fine.
Deutsche Lufthansa AG — alongside two of its subsidiaries, Lufthansa Cargo AG and Swiss International Air Lines AG — brought allegations of the cartel to the European Commission's attention in December 2005.
The German aviation group claimed that a number of carriers had anticompetitively coordinated elements of the price for certain airfreight services. Carriers had introduced "fuel" and "security" surcharges and refused to pay freight forwarders a commission on those surcharges, the group said.
The commission, acting as the European Union's competition enforcer, carried out unannounced inspections at the premises of a number of carriers around mid-February 2006.
Then in November 2010, the commission announced it had fined 11 airlines more than €799 million for operating the cartel between 1999 and 2006, which encompassed air freight flights to, from and within Europe. The commission issued the penalties against British Airways PLC and Cargolux Airlines International SA, and made further penalty decisions in relation to 10 other carriers.
Lufthansa received full immunity for reporting the cartel and all the other airlines received various reductions for cooperating with the investigation.
The EU's General Court in December 2015 overturned €790 million worth of fines against 12 of the air cargo carriers accused of colluding on pricing, including Air France-KLM. The court found that the commission's decision to levy the fines was internally inconsistent.
Although the commission had said that the carriers operated a single massive cartel, its analysis described four separate competition infringements carried out on different routes and at different times, the General Court ruled. That inconsistency robbed the carriers of their right to understand and appeal the decision, the court concluded.
Following the successful challenges, the commission reevaluated its decision and examined the limits of its jurisdiction to find and penalize competition rule infringements. Ultimately, in March 2017, it imposed a second round of penalties, finding that its investigations had uncovered a worldwide cartel involving 19 carriers.
A group of airlines then lodged applications in May and June 2017 at the General Court seeking to annul the commission's 2017 decision or reduce the penalties that remained against them. The General Court later upheld almost €520 million of the commission's fines against the group of airlines.
Air France-KLM told Law360 Friday that it is committed to "comply strictly with competition rules" and provisions had been made in respect of the fines. Cargolux declined to comment. Representatives for the other parties did not immediately respond to requests for comment Friday.
Latam Airlines Group and Lan Cargo are represented by Oliver Geiss and Brian Hartnett of Squire Patton Boggs, and W. Sparks.
British Airways is represented by Tom Coates of Blackstone Chambers, Thomas Sebastian of Essex Court Chambers, Robert O'Donoghue KC of Brick Court Chambers, and Anna Lyle-Smythe of Slaughter and May.
Singapore Airlines and Singapore Airlines Cargo are represented by Jean Paul Poitras, Javier Ruiz Calzado and John Wileur of Latham & Watkins LLP.
Deutsche Lufthansa, Lufthansa Cargo and Swiss International Air Lines are represented by Sven B. Völcker and Michael J. Esser of Latham & Watkins LLP, and R. Benditz.
Japan Airlines is represented by Jean-François Bellis and Richard Burton of Van Bael & Bellis, and K. Van Hove.
Cathay Pacific is represented by Erling Estellon and Martin Rees of Squire Patton Boggs, and James Flynn KC of Brick Court Chambers.
KLM and Martinair Holland are represented by Frederick Brouwer of Stibbe, alongside R. Wesseling.
Cargolux is represented by Elvira Aliende Rodriguez of Willkie Farr & Gallagher.
SAS Cargo Group, Scandinavian Airlines System and SAS AB are represented by Bart Creve of Kromann Reumert, Genevra Forwood and James Killick of White & Case LLP, and M. Kofmann.
The European Commission is represented by George Peretz KC, Josh Holmes KC and Nicholas Khan KC of Monckton Chambers, Pedro Caro de Sousa, Ina Söderlund and Pascal Berghe of the European Commission's Legal Service, and A. Dawes, C. Zois, B. Doherty and C. Urraca Caviedes.
Full counsel information was not immediately available Friday.
The cases are Latam Airlines Group SA and another v. The European Commission, British Airways PLC v. The European Commission, Singapore Airlines Ltd. and another v. The European Commission, Deutsche Lufthansa AG and others v. The European Commission, Japan Airlines Co. Ltd. v. The European Commission, Cathay Pacific Airways Ltd. v. The European Commission, Koninklijke Luchtvaart Maatschappij NV v. The European Commission, Martinair Holland NV v. The European Commission, Cargolux Airlines International SA v. The European Commission, SAS Cargo Group A/S and others v. The European Commission, case numbers C‑375/22 P, C‑378/22 P, C‑379/22 P, C‑380/22 P, C‑381/22 P, C‑382/22 P, C‑385/22 P, C‑386/22 P, C‑401/22 P and C‑403/22 P, in the European Court of Justice.
Feb 27
Deal Summary
