The NZ Commerce Commission’s ‘cartel blitz’ on international air cargo carriers has come to an end, with Air NZ throwing in the towel less than a month after calling for “common sense to prevail” in the long-running investigation and subsequent court cases.
While the ‘blitz’ is largely at an end, at least four freight class actions involving carriers still are to be decided. For Air NZ, the ending of the ComCom case was bitter-sweet. The carrier was forced to back down on its hitherto unwavering stance that it had not been involved in cartel arrangements. and it took a hit of NZ$7.5 million plus costs, a hefty amount that reflected the carrier’s substantial share of the inbound air freight market.
But it retreated with honour. ComCom stressed the carrier was not as culpable as some of the other airlines it had pursued and Air NZ had not been a cartel participant on a global basis.
While no-one in Air NZ is saying so on the record, sources claim the company’s new boss, Christopher Luxon, just wanted the case resolved and off the books; and while many issues already had been resolved, there was a long way to go in court.
This magazine has chronicled the seven years or so of the blitz including key issues such as Air NZ’s concern that it couldn’t talk to staff being questioned by ComCom, whether cargo sales overseas constituted markets in NZ targeting Air NZ executives and allegations made by other carriers, largely as part of their plea-bargaining.
Air NZ had lost the ‘markets in NZ’ case but an appeal of the definition was under way.
The ban on talking to staff was lifted but later reasserted as ComCom’s powers were reconfirmed. However, in the interim Air NZ got the chance to share notes.
Action against individual executives was dropped, and ComCom had narrowed its focus.
Call for common sense In May, Air NZ called for ComCom to end its multi-million pursuit, after key evidence – still secret today- was retracted in the US.
General counsel John Blair said the quest should end.
“Air New Zealand remains adamant it has not breached New Zealand competition law. This matter has run for more than seven years and involves allegations relating to business conducted as long as 13 years ago. We have satisfied regulators in Europe and the USA concerning our conduct and are close to the end of our defence of allegations in Australia. In the NZ market, it is time for common sense to prevail.”
In early June, a joint statement from ComCom and Air NZ said “Air NZ has withdrawn its proceeding challenging the settlement agreement in the air cargo proceeding”.
Air NZ told investors that a penalty around NZ$7.5 million was on the cards. and “the amount was already factored into the normalised evidence before tax guidance communicated in April”. As a result, the share price barely blipped. The NZ$7.5 million took total NZ air cargo cartel penalty payments to NZ$42.50 million. In Australia, anti-cartel payments are currently running at A$98.5 million, the largest combined penalty to date in this country.
ComCom applied a 20 per cent discount for Air NZ’s admissions. It also recognised surcharges in Japan and Malaysia were agreed local regulators.
For its part, Air NZ acknowledged that, in the context of the definition of air cargo markets in New Zealand it should have obtained regulatory approval from the Ministry of Transport in NZ.
Air NZ did not enter a plea to allegations of an understanding in Australia between February and September 2000. None of the understandings concerned cargo shipped from NZ to any other country, Air NZ stressed.
NZ cartel saga is over. or is it?
AirCargo Archive Stories #224
Monday, 01 July 2013
The NZ Commerce Commission’s ‘cartel blitz’ on international air cargo carriers has come to an end, with Air NZ throwing in the towel less than a month after calling for “common sense to prevail” in the long-running investigation and subsequent court cases.
While the ‘blitz’ is largely at an end, at least four freight class actions involving carriers still are to be decided. For Air NZ, the ending of the ComCom case was bitter-sweet. The carrier was forced to back down on its hitherto unwavering stance that it had not been involved in cartel arrangements. and it took a hit of NZ$7.5 million plus costs, a hefty amount that reflected the carrier’s substantial share of the inbound air freight market.
But it retreated with honour. ComCom stressed the carrier was not as culpable as some of the other airlines it had pursued and Air NZ had not been a cartel participant on a global basis.
While no-one in Air NZ is saying so on the record, sources claim the company’s new boss, Christopher Luxon, just wanted the case resolved and off the books; and while many issues already had been resolved, there was a long way to go in court.
This magazine has chronicled the seven years or so of the blitz including key issues such as Air NZ’s concern that it couldn’t talk to staff being questioned by ComCom, whether cargo sales overseas constituted markets in NZ targeting Air NZ executives and allegations made by other carriers, largely as part of their plea-bargaining.
Air NZ had lost the ‘markets in NZ’ case but an appeal of the definition was under way.
The ban on talking to staff was lifted but later reasserted as ComCom’s powers were reconfirmed. However, in the interim Air NZ got the chance to share notes.
Action against individual executives was dropped, and ComCom had narrowed its focus.
Call for common sense In May, Air NZ called for ComCom to end its multi-million pursuit, after key evidence – still secret today- was retracted in the US.
General counsel John Blair said the quest should end.
“Air New Zealand remains adamant it has not breached New Zealand competition law. This matter has run for more than seven years and involves allegations relating to business conducted as long as 13 years ago. We have satisfied regulators in Europe and the USA concerning our conduct and are close to the end of our defence of allegations in Australia. In the NZ market, it is time for common sense to prevail.”
In early June, a joint statement from ComCom and Air NZ said “Air NZ has withdrawn its proceeding challenging the settlement agreement in the air cargo proceeding”.
Air NZ told investors that a penalty around NZ$7.5 million was on the cards. and “the amount was already factored into the normalised evidence before tax guidance communicated in April”. As a result, the share price barely blipped. The NZ$7.5 million took total NZ air cargo cartel penalty payments to NZ$42.50 million. In Australia, anti-cartel payments are currently running at A$98.5 million, the largest combined penalty to date in this country.
ComCom applied a 20 per cent discount for Air NZ’s admissions. It also recognised surcharges in Japan and Malaysia were agreed local regulators.
For its part, Air NZ acknowledged that, in the context of the definition of air cargo markets in New Zealand it should have obtained regulatory approval from the Ministry of Transport in NZ.
Air NZ did not enter a plea to allegations of an understanding in Australia between February and September 2000. None of the understandings concerned cargo shipped from NZ to any other country, Air NZ stressed.
