Freight Transport

Air France-KLM and Martinair Holland have agreed to pay freight forwarders $87 million in an air cargo price-fixing settlement agreement, but has declined to compensate European indirect shippers Sharon Gill reports

According to law firm Hausfeld & Co, the airlines have agreed to pay an $87 million settlement to a class of direct purchasers of airfreight services in respect of liability under US law for their acknowledged part in an air cargo cartel that breached competition laws around the world However, the airlines have refused to compensate European indirect purchasers that also suffered losses as a result of the airlines' cartel activities

The claims arise from a global cartel in international airfreight services that is believed to have occurred between January 2000 and late-2006

In terms of Monday's US settlement, Air France-KLM has agreed to pay money exclusively to direct purchasers (such as freight forwarders), which specifically excludes indirect purchasers of airfreight services, including those in Europe

However, Hausfeld says that this allows shippers to pursue their claims and recover the full amount of their damages in other jurisdictions around the world

Claims Funding International has signed a large group of European claimants who spent more than €335 billion on international airfreight during the cartel period CFI's managing director Peter Koutsoukis commented that it was regrettable that one of Europe's great airlines would decide to pay damages to its US customers but offer nothing to Europe-based customers

Between them, Hausfeld and CFI separately represent some US$5 to $6 billion of combined air cargo traffic purchased by shippers in the cartel period located on multiple continents

Hausfeld & CFI have signed a formal co-operation agreement to co-ordinate the pursuit of claims for shippers within the EU The companies have written a letter of demand to Air France-KLM demanding compensation for European victims of the cartel, and CFI is set to institute proceedings in the Netherlands against Air France-KLM

Monday's settlement follows an $85m price-fixing settlement secured in 2006 by US Class Counsel with Lufthansa on behalf of purchasers of airfreight shipping services to, from and within the US In this settlement, Lufthansa did offer compensation to indirect purchasers of airfreight

In anti-trust investigations around the world, both Air France-KLM and Martinair (now owned by KLM) have pleaded guilty to price fixing in a number of countries, with both airlines paying substantial fines and Martinair executive, Frank de Jong, receiving an eight-month prison sentence

Air France-KLM and Martinair Holland were among the airlines facing regulatory authorities in the US, which resulted in Air France-KLM paying a $350 million criminal fine - the second highest fine ever levied in a criminal antitrust prosecution

InCanada, the authorities imposed fines of $4 million on Air France, $5 million on KLM and $1 million on Martinair

The Federal Court in Australia ordered Air France and KLM to pay A$3 million each, and Martinair to pay A$5 million

Air France-KLM and Martinair were also fined by the regulatory authority in South Korea

In Europe, the anti-trust investigation that has been going on since December 2007 has yet to be wrapped up The European Commission accused 25 airlines, including Air France-KLM of violating EU regulations on restrictive business practices