SAA, BA and others in dock for fixing cargo freight rates

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Eight cargo carriers including SAA Cargo and British Airways (BA) face allegations of fixing the price of fuel surcharges and rates of cargo flown in and out of South Africa. The cargo carriers are the latest sector that the Competition Commission has so far caught allegedly fixing prices.

Other industries have included bread, dairy, fertiliser, and construction, Business Report newspaper adds. The advocacy and stakeholder manager at the Competition Commission, Oupa Bodibe, said the eight cases of collusion in the cargo market had been referred to the Competition Tribunal for adjudication yesterday. The commission had asked the tribunal to impose an administrative penalty of 10 percent of annual turnover on each of the carriers involved.

This excludes Germany’s flag carrier Lufthansa, which was granted immunity from prosecution on condition it fully co-operated in the investigation and prosecution, Business Report noted. Other cargo carriers facing price fixing allegations include Air France Cargo, KLM Cargo, Alitalia Cargo, Cargolux International, Singapore Airlines and Martinair Cargo. The commission initiated this investigation on March 27, 2006 after Germany’s flag carrier applied for leniency, admitting that various surcharges and price increases were agreed upon with its cargo sector competitors.

During the investigation the commission found that the conduct started in 1996 when there was an increase in the price of jet fuel. In their capacity as members of the International Air Transport Association, they then adopted a resolution in terms of which a fuel surcharge mechanism was introduced to the market. The resolution entailed a mechanism through which carriers would decide on the timing and the amount of the fuel surcharge on cargo, Business Report added.

Bodibe said the evidence before the commission indicated that this conduct continued until 2006. The cargo carriers allegedly identified routes and concluded agreements to implement increases in cargo rates on those routes. “This was done through meetings and workshop facilitated by Lufthansa, Cargolux, Air France, and KLM airlines,” Bodibe said yesterday.

The head of corporate affairs at SAA, Fani Zulu, told Business Report SAA was waiting for the commission to serve them with the “necessary papers” on this matter. “We can then study these and see what they say about the collusion. We will only comment after that.” The commercial manager at BA, Sue Botes, said that the airline would respond to the Competition Commission’s claims in due course.

Correction:

The International Air Transport Association (IATA) says the Commission’s statement is incorrect. “IATA has never operated a mechanism for determining fuel surcharges, says the global airline organisation’s director of corporate communications, Anthony Concil. “IATA has absolutely no involvement in the setting of fuel surcharges.” Concil adds in comments forwarded to defenceWeb that IATA has consistently advised its member airlines that fuel surcharges must be determined by each airline individually in the unilateral exercise of its business judgment and in compliance will all relevant laws.”



He cautions that just because the airlines involved in the Commission’s inquiry are members of IATA “does not and should no imply any IATA involvement. Neither IATA nor any of its officers or employees were implicated  in the coordinated worldwide investigation of cargo surcharge price coordination.”