Australian Lawsuit Charges 7 Airlines with Price Fixing

Qantas and six other international airlines have been served with a 200 million Australian dollar ($155 million) class-action lawsuit alleging price fixing in the global air freight industry, a lawyer said Thursday.

The lawsuit was lodged in the Federal Court of Australia in the southern city of Melbourne on Jan. 11 and was served Thursday to Australian flagship carrier Qantas Airways Ltd., said Kim Parker, principal of the law firm Maurice Blackburn Cashman, which brought the case to court.

Qantas, the alleged major beneficiary from the price-fixing, declined to comment.

Other airlines named in the action - Lufthansa AG, Singapore Airlines, Cathay Pacific Airways Ltd., Air New Zealand, Japan Airlines and British Airways PLC - were also served Thursday, Parker said.

The seven airlines allegedly have been part of a price-fixing cartel in the international freight industry since 2000, according to court papers.

The case focuses on surcharges the airlines imposed, including fuel surcharges attributed to higher fuel costs, security charges attributed to extra measures taken after the Sept. 11, 2001, terrorist attacks on the United States and war-risk surcharges attributed to higher insurance costs linked to the Iraq war.

The action alleges that the surcharges were not representative of operational costs and were imposed in agreement between the airlines to artificially raise prices.

"Air freight surcharges have been unlawfully inflated over the last seven years," Parker said.

Parker said price-fixing and market-rigging by powerful organizations were the worst kinds of anticompetitive abuse and breached Australia's federal competition laws.

The seven airlines were named because they account for about 60 percent of the Australian air cargo market.

Qantas has a 22 percent share, Singapore 16 percent, Cathay 8 percent, New Zealand 6.5 percent, British and JAL both under 3 percent, and Lufthansa almost 2 percent.

If the case is successful, the airlines' financial liability is expected to reflect the size of their market share.

The lawsuit is a first in Australia, although similar class-action lawsuits accusing airlines of colluding on cargo charges have been launched in the United States and Canada.

The Australian law firm is working in conjunction with U.S. class-action specialist firm Cohen, Milstein, Hausfeld & Toll, which reached a settlement with Lufthansa on the same issue in November last year. The Cologne-based airline agreed to pay $85 million to settle pending class-action lawsuits in the United States.

Also in November, UAL Corp., the parent of United Airlines, agreed to settle lawsuits alleging the same violations of U.S. antitrust laws.

More than a dozen airlines were drawn into an investigation by U.S. and European Union officials in February last year of suspected collusion in the air cargo industry.

Parker said plaintiffs in the Australian lawsuit could number in the thousands. Every business that spent more than 20,000 Australian dollars ($15,000) on air freight charges since 2000 were part of the class action, she said.

The lawsuit will come before the Federal Court for a directions hearing on March 16, a court official said.


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