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New Zealand

New Zealand regulator to prosecute airlines for price fixing  Dec 15, 2008

WELLINGTON - New Zealand's competition watchdog is to take legal action against 13 airlines and seven individuals for alleged price fixing and cartel behaviour in the air freight market, a charge denied by the national carrier Air New Zealand.

The Commerce Commission said the airlines had colluded to raise the price of air freight by imposing fuel surcharges for more than nine years.

Air New Zealand's general counsel John Blair said it has been co-operating with the regulator's investigation, but it found no basis for the charges, and the commission has repeatedly refused to share its evidence with the largely state-owned airline.

"This is clearly an approach designed to justify their existence and seems more about grandstanding than about getting to the bottom of the allegations," Blair said in a statement.

Air New Zealand would vigorously defend the case, Blair said.

The commission said the alleged price fixing would have caused more harm to New Zealand because of the country's distance from its markets.

"It will have resulted in increased costs for exporters and importers and higher overall prices for many consumer goods," said Commission chair Paula Rebstock.

The airlines to be prosecuted are: Air New Zealand, British Airways, Cargolux International, Cathay Pacific, Emirates, Garuda International, Japan Airlines, Korean Airlines, Malaysian Airline Systems, Qantas, Singapore Airlines, Thai Airlines and, United Airlines.

Shares in Air New Zealand, about 76-percent owned by the government, last traded unchanged at NZ$0.84. The stock has lost 56 percent so far this year, compared with a 33.4 percent drop in the benchmark top-50 .NZ50 index.

New Zealand's international air cargo market is worth around NZ$400 million (146.7 million), and during the time of the alleged offences, airlines would have earned about $2.9 billion.

The Commission has already prosecuted three airlines for not co-operating with its investigation, with a court decision due in January.

Competition authorities around the world including those in the European Union, United States and Australia have taken action against airlines for price fixing in the air freight market.

Last week, a court in Australia ordered Qantas to pay A$20 million for price fixing on cargo charges between 2002 and 2006.

New Zealand regulator to prosecute airlines for price fixing

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