The European Commission on Wednesday handed out $225 million in fines to 14 air freight forwarding companies, including some of the largest global firms in the sector, for fixing prices on several routes.
The fines were largest for Kuehne + Nagel ($71.5 million) and Panalpina ($61.9 million), while UPS was also hit with a $13 million penalty. DHL Global Forwarding and Exel were exempt from the fines because they informed the EU’s antitrust regulator about the collusion.
The probe concerned price-fixing in four separate cartel infringements, including freight-forwarding services from the United Kingdom to outside the European Economic Area (EEA, from the EEA to the United States, from China to the EEA, and from southern China and Hong Kong to the EEA), according to a Wall Street Journal
The commission launched surprise raids of the companies in October 2007.
“In times of crisis, it is all the more important to stamp out the hidden tax that cartels impose on our economy," said EU Antitrust Commissioner Joaquín Almunia. "These cartels affected individuals and companies shipping goods on important trade lanes. Many European exporters and consumers of imported goods may have been harmed as a result. Companies should be aware that crossing the line and colluding on prices comes at a high price, as today's decision illustrates."
In November 2011, K+N entered a plea agreement with the U.S. Justice Department over the same activities and agreed to a fine of $9.8 million.
"We will carefully consider the decision of the EU Commission and its rationale," said Karl Gernandt, chairman of Kuehne + Nagel International AG. "However, already now we are of the opinion that the commission has not correctly investigated the facts and the participation of Kuehne + Nagel and has drawn significantly incorrect factual and legal conclusions.
"In addition, Kuehne + Nagel’s comprehensive cooperation throughout the investigation was not adequately acknowledged. That is why we take into consideration to appeal against the decision before the European courts,” he said.
Panalpina likewise said it is considering an appeal.
“Panalpina will analyze the commission’s decision given its right to appeal the decision to the European General Court,” the company said. “The Group has so far made no provision for the penalty of 46.5 million euros ($61.9 million) as it was not in a position to predict the outcome of this proceeding and to assess its financial exposure. It is Panalpina’s position, which is supported by independent economic evidence, that the infringements likely did not affect prices paid by Panalpina’s customers.”
Panalpina settled with the U.S. Justice Department for $12 million.
“Panalpina also completed settlement negotiations with the New Zealand Commerce Commission and the agreed penalty was approved by the competent court,” the company said. “Identical antitrust proceedings in Canada and Australia were dropped. Two antitrust proceedings are still ongoing in Switzerland and Brazil.”
The Swiss company said it has in the last few years “successfully built a state-of-the-art compliance structure aimed at ensuring rigorous adherence to competition and other pertinent laws throughout the world.” — Eric Johnson