The Court of Justice upholds the fines imposed by the Commission on companies for their participation in cartels in the international air freight

By decision of 28 March 2012, the Commission imposed fines amounting in total to €169 million on a number of companies by reason of their participation, in periods between 2002 and 2007, in various agreements and concerted practices on the market for international air freight forwarding services. Those services included the organisation of transportation of items, and could also include activities such as customs clearance, warehousing or ground services, on behalf of customers according to their needs.

The Commission held that the anti-competitive conduct of the companies, which agreed on the fixing of various pricing mechanisms and surcharges, gave rise to four distinct cartels.

The ‘new export system’ (NES) cartel concerned a pre-clearance system for exports from the UK  to countries outside the European Economic Area, which was introduced by the UK authorities in 2002. A group of freight forwarders agreed to introduce a surcharge for NES declarations.

The ‘advanced manifest system’ (AMS), introduced after the terrorist attacks of 11 September 2001, describes legislative provisions of the United States customs authorities that require companies to submit in advance data on goods that they intend to ship to the United States. A number of freight forwarders coordinated the introduction of a surcharge applicable to the AMS service, for the electronic communication of the data concerned to the United States authorities.

The ‘currency adjustment factor’ (CAF) cartel was designed to achieve agreement on a common tariff strategy in order to deal with a risk of a fall in profits owing to the decision of the People’s Bank of China in 2005 that it would no longer peg the Chinese currency (renminbi or RMB) to the United States dollar (USD). A number of international freight forwarders decided to convert all contracts with their customers into renminbi and to introduce a CAF surcharge, setting the amount.

Last, the ‘peak season surcharge’ (PSS) cartel concerned an agreement between a number of international freight forwarders relating to the application of a temporary rate adjustment factor. That factor was imposed as a reaction to increased demand in the air freight forwarding sector at certain times, which led to a shortage of transportation capacity and an increase in transport rates. The agreement was designed to protect the freight forwarders’ margins.

A number of the companies concerned brought actions before the General Court for the annulment of the Commission’s decision or for a reduction in their respective fines.

In its judgements of 29 February 2016, the General Court upheld the amount of the fines imposed on Kühne + Nagel International, Schenker, Deutsche Bahn and Others, Panalpina World Transport (Holding), Ceva Freight (UK) and EGL. Those companies, with the exception of Ceva Freight (UK) and EGL, brought an appeal before the Court of Justice asking that the General Court’s judgements be set aside.

In yesterday’s judgements, the Court of Justice rejects all the arguments put forward by those companies and upholds the amount of the fines imposed. It declares in particular that the General Court was correct in holding that it is appropriate to base the calculation of the amount of the fines on the value of sales associated with freight forwarding services as a package of services on the trade routes concerned.

 

NES cartel Fines imposed by Commission (in euros) Decision of the General Court/Court of Justice
Ceva Freight (UK) and EGL 2 094 000 Fine upheld by the General Court

 

No appeal before the Court of Justice

Kühne + Nagel International and Kühne + Nagel (UK) 5 320 000 Appeal dismissed

 

Fine upheld

Schenker (UK) as an economic successor of Bax Global 3 673 000 Appeal dismissed

 

Fine upheld

AMS cartel    
Kühne + Nagel International and Kühne + Nagel Management 36 686 000 Appeal dismissed

 

Fine upheld

Schenker and Deutsche Bahn 23 091 000 Appeal dismissed

 

Fine upheld

Panalpina          Management                          and Panalpina World Transport (Holding) 23 649 000 Appeal dismissed

 

Fine upheld

UTi Worldwide, UTi Nederland and UTI Worldwide (UK)  

 

 

Total of the fine: 3 068 000

 

1 273 000 imposed jointly and severally on the companies

 

UTi Worldwide : 1 795 000 jointly and severally liable with UTI Worldwide (UK) (738 000) and UTi Nederland

(954 000)

Action partially upheld by the General Court

 

Reduction of the fine Total of the fine: 2 965 000

1 273 000 imposed jointly and severally on the companies

 

UTi Worldwide : 1 692 000 jointly and severally liable with UTI Worldwide (UK) (738 000) and UTi Nederland

 

    (954 000)

 

No appeal before the Court of Justice

CAF cartel    
Kühne + Nagel International and Kühne + Nagel (Shanghai) 451 000 Appeal dismissed

 

Fine upheld

Schenker China 2 444 000 Appeal dismissed

 

Fine upheld

Schenker China and Deutsche Bahn 3 071 000 Appeal dismissed

 

Fine upheld

Panalpina China and Panalpina World Transport (Holding) 3 251 000 Appeal dismissed

 

Fine upheld

PSS cartel    
Kühne + Nagel International and Kühne + Nagel (Hong Kong) 11 217 000 Appeal dismissed

 

Fine upheld

Schenker     International     (HK)                     and Deutsche Bahn 2 656 000 Appeal dismissed

 

Fine upheld

Panalpina China and Panalpina World Transport (Holding) 19 584 000 Appeal dismissed

 

Fine upheld

 

Source: Holly Gallagher

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