BRAZIL FINES AIRLINES OVER CARGO FUEL SURCHARGE CARTEL

On 28 August 2013, Brazil’s antitrust Flag_of_Brazil_svgregulatory body, the Administrative Council for Economic Defence (CADE), fined four airlines and seven individuals a total of BRL293 million (approximately USD125 million) for price fixing in the international air cargo sector. The parties were found to have colluded to fix the price and timing of fuel surcharges on freight shipments between 2003 and 2005, during which time they controlled about 60 per cent of the market. United Airlines was also investigated but CADE found that there was no evidence of its participation in the cartel.
The largest fines of BRL145 million and 114 million were imposed on VarigLog, which filed for bankruptcy last year, and ABSA Aerolineas Brasilerias (currently TAM Cargo and a part of Latam Airlines Group SA), respectively. American Airlines and Alitalia-Linee Aeree Italiane received substantially lower fines.

Deutsche Lufthansa AG, Lufthansa Cargo AG, Swiss International Airlines and five individuals were not fined after reporting the cartel to CADE and signing leniency agreements in 2006. Following this, dawn raids were carried out at the offices of a number of implicated airlines and evidence obtained that led to last week’s fines. Societe Air France, KLM and two individuals signed an agreement with CADE in February 2013 in which they admitted unlawful cartel conduct, pledged to cease the practice and paid a fine of BRL14 million (approximately USD6 million).

American Airlines has issued a statement indicating that it disagrees with CADE’s decision to fine the company and that it is evaluating its options to appeal the decision. The fines follow an international crack-down against price fixing in the airline sector. The US Department of Justice, the European Commission and the Canadian Competition Bureau have all issued substantial fines in recent years.

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About Michael O'Kane

Michael O’Kane is a partner and Head of the Business Crime team at leading UK firm Peters & Peters. Described as ‘first-rate’ (Legal 500 2012), he “draws glowing praise from commentators” (Chambers 2013) for handling the international aspects of business crime, including sanctions, extradition and mutual legal assistance. Called to the Bar in 1992 and prior to joining Peters & Peters he was a senior specialist prosecutor at the Crown Prosecution Service Headquarters(CPS). At CPS HQ he was a key member of a small specialist unit responsible for the prosecution of serious and high profile fraud, terrorist and special interest criminal matters including the Stansted Airport Afghan hijacking and the prosecution of Paul Burrell (Princess Diana’s butler). Michael joined Peters & Peters in 2002. He became a partner in May 2004, and Head of the Business Crime team in May 2009. Since joining Peters & Peters, Michael has dealt with a wide range of business crime matters. He has particular expertise in international sanctions, criminal cartels, extradition, corruption, mutual legal assistance, and FSA investigations. Described as“ an influential practitioner in fraud and regulatory work, so much so that he is top of the referral lists of many City firms for independent advice for directors” (The Lawyer’s Hot 100 2009), he was recognised as one of the UK’s most innovative lawyers in the 2011 FT Innovative Lawyer Awards and included in the list of the UK's leading lawyers in 'The International Who's Who of Asset Recovery 2012. In 2012 he was the winner of the Global Competition Review Article of the Year. Michael regularly appears on television and radio to discuss his specialist areas and he is the author of the leading textbook on the UK Criminal Cartel Offence “The Law of Criminal Cartels-Practice and Procedure” (Oxford University Press 2009). Recent/Current Sanctions Work • Representing 109 individuals and 12 companies subject to designation by the European Council under targeted measures imposed against Zimbabwe. This is the largest and most complex collective challenge to a sanctions listing ever brought before the European Court. • Acting for a former Egyptian Minister and his UK resident wife, challenging their designation by the European Council of Ministers under targeted measures brought against former members of the Egyptian Government. • Advising a company accused in a UN investigation report to have breached UN sanctions imposed in relation to Somalia. • Advising a UK company in relation to ongoing commercial relationships with an Iranian company listed under both EU and UN sanctions. • Advising an individual in relation to a UK investigation for alleging breaching nuclear export controls.

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