The European Commission today fined 14 leading freight companies a total of €169 million foroperating four different price-fixing cartels for international air freight services between 2002
and 2007.The companies are (in alphabetical order) Agility, CEVA (EGL), DSV, Expeditors, Hellmann,Kintetsu, Kuehne + Nagel, Nippon Express, Panalpina, Schenker, Toll, UPS Supply Chain Solutions(previously Menlo Worldwide), UTi and Yusen.
The Commission said that the freight forwarders colluded on surcharges and charging mechanismsconcerning important trade lanes, in particular the Europe-USA and the China/Hong Kong-Europelanes. Participants and duration varied in each of the four cartels. In four distinct cartels, thecartelists established and coordinated four different surcharges and charging mechanisms, which arecomponent elements of the final price billed to customers for these services.
In most cases, the freight forwarders took specific measures to conceal the cartel behaviour. Inone of the cartels (the “new export system” cartel), the participants organised their contacts in aso-called “Gardening Club” and code names based on names of vegetables – such as asparagus and babycourgettes – were used when talking about fixing prices. In another, a specific yahoo email accountwas set up to facilitate exchanges between the cartel participants (the “currency adjustmentfactor” cartel).
The “new export system” (or NES) cartel followed the UK’s introduction of an electronicdeclaration for exports in 2003. Freight forwarders agreed on establishing a surcharge on thisreporting service and to fix its amount according to the size of the customer, the Commission said.The “advanced manifest system” (AMS cartel) agreed on a surcharge to provide the US customs withadvance information on goods to be shipped to the US.
In the “currency adjustment factor” (CAF) cartel, following the appreciation of the Chinesecurrency (RMB) against the USD in 2005, international freight forwarders agreed on a shift ofcontracts from USD to RMB or, if this was not possible, on the introduction of a CAF surcharge andon its level. The collusion was driven by the fact that in general, the local services at Chineseairports were paid for by forwarders in RMB, while the customers of forwarders were billed in USDwhich consequently might have led to losses. In the “peak season surcharge” (PSS) cartel thefreight forwarders agreed in so called “Breakfast Meetings” held in Hong Kong on the introductionand timing of a PSS, to be charged during the peak season transport period in the run up toChristmas (lasting generally from September to December) and on occasions also discussed the levelof the surcharge.
Deutsche Post (including its subsidiaries DHL and Exel) received full immunity from fines underthe Commission’s 2006 leniency notice for all four cartels, as it was the first to reveal theirexistence to the Commission. In addition, Deutsche Bahn (including Schenker and BAX), CEVA, Agilityand Yusen received reductions of fines ranging from 5% to 50 %. The reductions reflected the timingof their cooperation and the extent to which the evidence they provided helped the Commission toprove the respective cartels.
Commission Vice President in charge of competition policy, Joaquín Almunia, said: “In times ofcrisis, it is all the more important to stamp out the hidden tax that cartels impose on oureconomy. These cartels affected individuals and companies shipping goods on important trade lanes.Many European exporters and consumers of imported goods may have been harmed as a result. Companiesshould be aware that crossing the line and colluding on prices comes at a high price, as today’sdecision illustrates.”
In response to the decision, Kuehne + Nagel, which was fined €53.7 million, said it wasconsidering an appeal. Chairman Karl Gernandt said: “We are of the opinion that the Commission hasnot correctly investigated the facts and the participation of Kuehne +Nagel and has drawnsignificantly incorrect factual and legal conclusions. In addition, Kuehne + Nagel’s comprehensivecooperation throughout the investigation was not adequately acknowledged. That is why we take intoconsideration to appeal against the decision before the European courts.”
Panalpina, which was fined €46.5 million, claimed that the infringements were unlikely to haveaffected prices paid by its customers and said it was also considering an appeal.
