Lufthansa Pays $85 Million in Cargo Pricing Probe

After just over six months of investigations, the coordinated international probe of air cargo price fixing has resulted in an $85 million settlement with Lufthansa, which will provide conditional immunity from antitrust investigations for it and its Swiss International Airlines subsidiary. The agreement should protect both airlines from class action suits as well.

American Airlines and United Airlines have also reached an agreement with Department of Justice (DOJ) which does not involve any financial penalty. American Airlines will not change pricing, but will provide information to shippers who filed the suits. United says it will cooperate with plaintiffs.

At the heart of the issue are surcharges for fuel, security and insurance levied against cargo shippers. European airlines reportedly initiated the fees and U.S. airlines followed their lead in imposing the fees. However, for criminal charges to be brought in the U.S., DOJ would have to prove the airlines actively conspired to fix prices.

The probe was launched in February 2006 when officials of the U.S. DOJ, European Union competition officials and members of the Korean Fair Trade Commission “raided” or made “unscheduled visits” to the offices of various airlines.

According to industry reports, 14 airlines have been contacted regarding the investigation. Though indications are that Virgin Atlantic Airways was also part of the current settlement, information was not readily available on whether the British airline was subject to fines.

For more information:

FedEx and UPS Drawn Into Price Fixing Probe (7/24/2006)

Probe looks into air cargo price fixing (March 2006)

Air cargo price fixing probe mounted (2/28/2006)