Lufthansa reported a breach of competition rules by a cartel of airlines, who were fined by the Commission in 2010 | Getty
Air cargo cartel has spawned billions of euros of damages claims in Europe.
A European court Wednesday dealt the European Commission a major defeat, overturning a landmark 2010 decision to fine some of the world’s largest airlines almost €800 million for colluding on air cargo prices.
The General Court’s judgments “represent an unusual slap in the face for the Commission, which typically prevails in appeals of decisions in cartel cases,” said Jay Modrall, an antitrust partner at law firm Norton Rose Fulbright.
In particular, he noted the court’s “strong language” in annulling the Commission decision.
While potentially a financial blow to aggrieved customers in the air cargo litigation, the verdict also undermines what is seen as a test case for Europe’s efforts to help cartel victims claim compensation before the courts.
In the air cargo litigation, companies including Ericsson, Philips, Robert Bosch and Schenker, filed damages claims worth as much as €7 billion in courts in the U.K., the Netherlands and Germany.
Following the Commission’s 2010 decision, more than a thousand companies filed complaints from industries ranging from flower importers, car manufacturers and logistics firms, making it the largest cartel lawsuit in European history.
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“We are carefully considering the judgments and the implications and awaiting confirmation by the Commission as to whether it is going to appeal,” said Martin Hyde, a lawyer and director of Claims Funding Europe, which has filed a lawsuit in Amsterdam on behalf of some 200 companies.
The EU’s General Court held the Commission’s decision was “not entirely internally consistent.” While parts of the decision referred to four separate cartels, the final conclusions treated them as a single instance of collusion, the court said. The court rarely overturns the Commission’s cartel decisions.
A spokesperson for the Commission said it was considering whether to appeal, but noted that the court did not contradict the case’s evidence.
“The Commission provided little evidence and shed little light on how such a cartel could be characterized as a single global conspiracy,” said Yves Botteman, an antitrust partner at law firm Steptoe & Johnson. He said the Commission seemed to have “embarked in a cut and paste exercise” of the leniency applications of various airlines.
In November 2010, Joaquin Almunia, the European commissioner for competition 2009-14, announced he was fining 11 airline cargo companies a total of €799.445.000. The Commission said they had participated in a worldwide cartel to fix the way they would pass higher fuel and security costs on to customers.
The airlines were Air Canada, Air France-KLM, British Airways, Cathay Pacific, Cargolux, Japan Airlines, LAN Chile, Martinair, SAS, Singapore Airlines and Qantas. Lufthansa was the whistleblower and so escaped the fines. All the airlines appealed except Qantas. Air France-KLM picked up the highest fine, amounting to around €300 million.
Both the Commission and the airlines have two months to appeal the ruling. In the past, the Commission has reacted to losing before the court by fine tuning its arguments and reimposing fines.
This story has been updated with new reporting.