Aviation

Garuda to pay $19m price-fixing penalty after dropping appeal

The Federal Court has approved a payment plan for Garuda Indonesia to pay a $19 million fine relating to a long-running case against a global price-fixing cartel in the air cargo industry.

The Australian Competition & Consumer Commission (ACCC) launched court action against Garuda and 14 other airlines between 2008 and 2010, alleging cartel conduct between 2002 and 2006 concerning price fixing of surcharges on air cargo services.

Thirteen of the airlines settled with the ACCC, while Air New Zealand and Garuda proceeded to a trial which concluded in May 2013.

In October 2014, the Federal Court initially dismissed the ACCC’s case against Air New Zealand and Garuda. The competition watchdog appealed the decision and the Full Court of the Federal Court upheld the ACCC’s appeal.

Garuda and Air NZ then appealed the decision to the High Court, which unanimously dismissed the appeal. In May 2019, the Federal Court ordered the $19 million penalty against Garuda.

Garuda appealed against the penalty judgment in June 2019, but has now withdrawn its appeal.

Earlier this month, the court ordered, by consent, that Garuda pay the $19 million penalty, and a contribution to the ACCC’s costs, in monthly instalments between December 2021 and December 2026.

ACCC chair Rod Sims said: “The airline industry has suffered significantly because of the pandemic and these orders take account of that.

“What is important is that Garuda has been ordered to pay the full penalty for its role in this serious price-fixing cartel without a further appeal.

“We are pleased this concludes this long-running case against 15 global airlines, including Garuda, Air New Zealand, Qantas, Singapore Airlines and Cathay Pacific, which has resulted in total penalties of $132.5 million being ordered by the court.”

Under the court orders, if Garuda misses a monthly payment, the entire remaining outstanding amount becomes due for payment within 30 working days.

“Businesses of all sizes should note the ACCC’s determination to fight this large international cartel,” Sims said.

“Significant penalties, like the $19 million penalty ordered against Garuda, send a strong warning that anti-competitive conduct has serious consequences.

“We will also continue to closely watch for any signs of anti-competitive conduct in the airline industry specifically following the disruption to travel due to COVID-19, given our monitoring role in the domestic airline industry.”


Featured image source: iStock/bayuharsa

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