Air Canada fined in price-fixing scheme

The European Union has fined 11 airlines, including Air Canada, a total of almost $1.1 billion for fixing prices on international cargo shipments.

EU penalizes 11 airlines a total of $1.1B

The European Union has fined 11 airlines, Air Canada among them, a total of almost $1.1 billion for fixing prices on international cargo shipments, leading to higher prices for businesses to move their goods.

Air Canada has been fined for price-fixing by the European Union. The airline escaped similar charges in Canada and the U.S. ((Frank Gunn/Canadian Press)

The U.S. and Canada have already charged and fined several of the air carriers, but Air Canada has until now escaped punishment.

The European Commission said the carriers "co-ordinated their action on surcharges for fuel and security without discounts" between December 1999 and February 2006, when the EU's investigation stopped the cartel.

"Had it not been for the commission's intervention, the cartel would not have ended in 2006," said Competition Commissioner Joaquin Almunia.

Air France-KLM received the heaviest penalty, €310.1 million of the total €799.4 million in fines levied against all 11. Air France-KLM will also have to pay the fine of €29.5 million imposed on Martinair, which it now owns.

Air Canada said it was fined €21 million, the equivalent of $29.1 million.

British Airways was fined €182.9 million, while Cathay Pacific, Cargolux, Japan Airlines, LAN Chile, SAS, Singapore Airlines and Qantas were assessed fines between €8.2 million and €79.9 million.

The commission dropped charges against 11 other carriers and one consultancy because it couldn't prove they participated in the cartel.

Lufthansa escaped a fine because it blew the whistle on the price-fixing arrangement.

All other carriers except Singapore Airlines had their fines reduced by between 15 and 50 per cent for co-operating with the EU investigation.

"It is deplorable that so many major airlines co-ordinated their pricing to the detriment of European businesses and European consumers," Almunia said. "With today's decision the commission is sending a clear message that it will not tolerate cartel behaviour."

The U.S. Department of Justice previously charged 18 airlines and several executives in its investigation of the cargo cartel and imposed more than $1.6 billion US in fines.

The EU can't pursue companies or individuals with criminal charges, but Almunia didn't rule out that individual countries might impose criminal charges.