Air France-KLM Agrees to Pay $87 million Price-fixing Fine
Air France-KLM is the largest airline company in Europe, but this doesn’t make them immune to paying fines for price-fixing. The carrier has just agreed to pay US$87 million in a settlement over civil damages for being involved in fixing cargo prices.
An investigation was started in 2006 into price-fixing by a number of global airlines between 2000 and 2006. Some of those involved were British Airways, Qantas, Cathay Pacific and Korean Air. The airlines colluded to fix prices on specific routes and then monitored the rates to make sure they were enforced. Since then, the US Department of Justice has imposed more than US$1.6 billion in fines on global airlines. There is still the possibility of more fines being handed out though, as the European Commission is still conducting their investigation.
So far, the former vice president of KLM cargo subsidiary Martinair, Franciscus Johannes de Jong, agreed last year to pay US$20,000 and serve 8 months in jail for participating in a cartel. After that, former clients and subsidiaries of the airline company started claiming civil damages.
Air France-KLM has only agreed to pay US$87 million. This isn’t set in stone, as United States courts still have to approve it. The money is due to be repaid to the French-Dutch carrier’s direct cargo customers. This means that any indirect customers, who paid for services through a third party, won’t be reimbursed from this settlement.
However, Michael Hausfeld, the freight shippers’ co-lead counsel, has indicated that this isn’t over. He says that, while this settlement is a huge and important step forward, they look forward to seeking the right amends for the indirect customers who were also overcharged because of the cartel.