As if trying to climb out of a pandemic-shaped hole wasn't enough, Air France-KLM is now being charged million-euro fines for participating in a global air cargo cartel that began over two decades ago and lasted for a little over six years.

Losing the appeal of the re-issuing

On Wednesday, the duo lost their challenge against fines that were re-imposed by EU antitrust regulators five years ago. In 2017, the European Commission levied a total of €776.5 million against 13 operators involved in fixing airfreight services, fuel, and security surcharges between December 1999 and February 2006.

The fines were first imposed in 2010, and an initial court fight against them was won in 2015. However, the EU competition enforcer subsequently found the procedures of the Luxembourg-based General Court to be faulty.

The Commission then saw its opportunity to re-structure its case and bring it back to the court. The fines were re-imposed in 2017 (apart from those of cargo specialist Martinair Holland, whose penalties were partially reduced).

Air France-KLM may re-appeal the decision. However, the formal statement, shared by an airline spokesperson with Reuters, was neutral and observatory. It read,

"Air France-KLM has taken note of the EU General Court’s judgement on the appeal filed against the decision of the European Commission of 17 March 2017 against 13 cargo operators, including Group airlines Air France, KLM and Martinair for practices considered to be anti-competitive in the air cargo sector."

Air France-KLM's share of the fines amounts to €325.5 million. The judges rejected the airlines' appeals along with those of Martinair Holland, Cargolux, SAS Scandinavian Airlines, and Singapore Airlines.

BA gets a 20% reduction in fine

Meanwhile, British Airways walked away seeing its fine reduced to €84.5 million. LATAM saw the most significant percentage cut of about 73%, from €8.2 million to €2.2 million. Cathay Pacific, Japan Airlines, and Air Canada also had their initial fines reduced significantly.

The original decision from 2010 also included Qantas. However, the Australian flag carrier never bothered to appeal its €8.8 million fine in the first place and thus was not included in the proceedings.

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Lufthansa was also part of the cartel, but according to Bloomberg, the airline was never fined as it was the one to inform the Commission of the underhand activities. Thankfully for the Germans, cargo cartels are more forgiving than other namesake organizations.

Lawsuits for damages are bound to follow

When the scheme was revealed, the EU antitrust cases triggered an onslaught of lawsuits from cargo customers who felt the participant operators had tricked them. Seeking compensation, the latest ruling in the case is bound to support their claims.

In November last year, the European Court of Justice even ruled that victims of the global air cargo cartel could claim damages for harm that occurred even before the current EU competition rules came into effect.

Source: Reuters, Bloomberg