No Fly Zone: EU Fines 11 Airlines $1.1 Billion In Price Fixing Case

European antitrust regulators have slapped 11 airlines with fines totaling 799 million Euros, or $1.1 billion, in a price-fixing case that spanned more than six years. The fines rank among the largest ever issued in a cartel case, the European Commission announced Tuesday.

Antitrust regulators say the carriers created a cartel when they agreed to impose the same flat-rate surcharge per kilo for all shipments and then later coordinated the introduction of a security surcharge. The goal, according to the Commission, was to ensure that surcharges were levied by all carriers in the cartel and that increases or decreases were applied across the board.

In addition, members of the cartel also refused to pay a commission on these surcharges to their clients, freight forwarders who arrange shipments. By refusing to pay a commission, the airlines aimed to reduce the impact of the surcharges on competitiveness and keep members from undercutting each other.

The European Commission levied fines against Air Canada (AIDIF), Air France-KLM (AFLYY), British Airways (BAIRY), Cathay Pacific (CPKAY), Cargolux, Japan Airlines (JALSQ), LAN Chile, Martinair, SAS, Singapore Airlines (SINGF) and Qantas (QBUSF). Meanwhile, Lufthansa (DLAKY) and its subsidiary, Swiss Air, received full immunity because they brought the issue to the Commission's attention and were the first to provide information about the cartel, the Commission said.

"It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers," said Joaquin Almunia, vice president of competition.