EU fines airlines €800 million for cargo cartel

BRUSSELS Tue Nov 9, 2010 3:22pm EST

BRUSSELS (Reuters) - Air France-KLM (AIRF.PA), British Airways BAY.L and nine other airlines were fined a total of 799 million euros ($1.11 billion) by EU regulators on Tuesday in a price-fixing case that could open the way for private claims against the companies.

The European Commission said in a statement the carriers coordinated surcharges for fuel and security without discounts between late 1999 to early 2006.

"It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers," Competition Commissioner Joaquin Almunia said.

The European Commission slapped a 340 million-euro fine, the biggest in the case, on the Franco-Dutch group Air France-KLM, which was formed from a merger in 2004 and which acquired Martinair in 2008.

Air France-KLM said in reaction that the penalty was disproportionate and it would appeal to the court.

It already faces a claim for up to 500 million euros from a group of companies that includes Ericsson (ERICb.ST) and Philips (PHG.AS), seeking compensation for alleged air cargo price-fixing.

HUNDREDS OF PRIVATE CLAIMANTS

Litigation firm Claims Funding International (CFI) which filed the lawsuit on behalf of the companies, said the number of claimants could increase.

"We have hundreds of companies waiting for the Commission decision before they sign up," said Peter Koutsoukis, CFI managing director. A Dutch court is due to hear the case on March 30.

The EU regulator fined British Airways 104 million euros, Singapore Airlines (SIAL.SI) 74.8 million euros, Cathay Pacific (0293.HK) 57.12 million euros, Qantas (QAN.AX) 8.9 million euros and Japan Airlines JALFQ.PK 35.7 million euros.

Luxembourg-based Cargolux Airlines was fined 79.9 million euros and LAN Chile LAN.SN 8.2 million euros.

Air Canada (ACa.TO), which was fined 21 million euros, said it may appeal the decision. It also said it had made a C$125 million provision related to the case in 2008 [nN09295430].

SAS (SAS.ST), which was fined 70.2 million euros, said it would appeal, but would provide for the charge in its third-quarter earnings to be announced on Wednesday.

Lufthansa (LHAG.DE) was found guilty of taking part in the cartel but received immunity from punishment because it had alerted the Commission to the existence of the price-fixing scheme. Swiss International Air Lines, acquired by Lufthansa in 2005, also escaped a fine.

(Additional reporting by Simon Johnson in Stockholm, Tim Hepher in Paris, Nicole Mordant in Vancouver; Editing by Rex Merrifield and Greg Mahlich)

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