In what is generally seen as a major embarrassment for the European Commission, the General Court of the European Union overturned €790 million (US$868 million) in fines imposed by
Brussels on 12 international airlines for running a global cargo cartel.
The Court, the second highest court in the 28-nation bloc, said in a ruling that the 2010 decision by the European Commission's competition watchdog was "contradictory".
"The General Court annuls the decision by which the Commission imposed fines amounting to approximately €790 million on several airlines for their participation in a cartel on the airfreight
market," the Luxembourg-based court said in a statement. The decision can still go to appeal in the EU's top court, the European Court of Justice.
The carriers involved in the cartel case were Air France, Air Canada, KLM, Martinair, British Airways, Cargolux, Cathay Pacific Airways, Japan Airlines, LAN Chile, Qantas, SAS and Singapore Airlines. Lufthansa escaped a sanction because it blew the whistle on the cartel.
Brussels had accused the carriers of coordinating their action on surcharges for fuel and security without discounts over a six-year period between December 1999 and February 2006.
However, the court ruled that the Commission's decision contained a confusion about whether there had been four separate offences or one continuous offence coordinated as a whole by a cartel, giving the airlines justification for challenging it.
It said there were "internal inconsistencies" in the Commission's ruling case and that the grounds of the case were "difficult to reconcile with the existence of a single cartel covering all of the routes.”
The court’s ruling might affect pending civil proceedings
Apart from the loss of face for the European Commission's competition watchdog, the court ruling may also threaten several civil cases, including two which logistics provider Deutsche Bahn/Schenker launched in New York and Cologne, Germany at the end of 2014. Just DB Schenker alone claimed compensation of €2 billion.
Industry observers say that those lawsuits against most of the same airlines mentioned in the EU case, are now rightfully in jeopardy. They claim that the wave of publicity that accompanied DB/Schenker's announcement of their court cases against the airlines in 2014, was mostly to intimidate the defendants and reach out-of-court settlements with them. DB Schenker itself was fined €35 million by the same European Commission for collusive price fixing in 2012.
Carriers feel relieved
Commenting on the Court's annulment this week, Lufthansa Cargo (which was not sanctioned), said the decision confirmed LH Cargo's position that the EU Commission 2010 judgement was unlawful. A spokesman added that the airline will now evaluate the court's decision, particularly with regard to the pending civil proceedings initiated by other parties.
Most of the other carriers that saw their fines overturned, said they welcomed the Court's decision and would conduct a detailed analysis of the judgement. Air France-KLM, which suffered the biggest fine of around €300 million, welcomed the move and said it abided by competition laws.
"The group hails the decision of the court, which has completely annulled the European Commission's decision and the fines," it said in a statement.
Nol van Fenema