US hits Air France-KLM, Cathay Pacific with criminal fines


Posted at Jun 26 2008 11:32 PM | Updated as of Jun 27 2008 07:32 AM

Agence France-Presse

WASHINGTON - Several airlines, including Air France-KLM and Cathay Pacific Airways, have agreed to pay US criminal fines totaling 504 million dollars to settle charges of a conspiracy to fix air cargo rates, officials said Thursday.

The US Justice Department said the airlines, which also included the SAS Cargo Group and Martinair Holland, had all agreed to plead guilty to the US charges 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 attorney general.

Air France-KLM agreed to pay a 350-million dollar criminal fine, the second highest ever applied in a US criminal antitrust investigation, for its role in the conspiracy.

Justice Department investigators 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.

The price-fixing conspiracy affected billions of dollars of consumer and other goods shipped by the airlines, including produce, electronics and medicines, according to the US government's probe.

The airlines have agreed to cooperate with the Justice Department's ongoing probe into the conspiracy. The airlines' plea agreements are subject to court approval.

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

The Justice Department has already charged other major airlines as part of its ongoing investigation into international air cargo prices.

Japan Airlines agreed in April to plead guilty to similar charges and was sentenced to pay a 110-million dollar criminal fine for its role in illegally fixing air cargo rates.

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

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