Not really sure what to make of this


Airlines pay $504M to settle price-fixing scam
Justice Department calls fine against Air France-KLM one of the largest in history

WASHINGTON (AP) -- Four international airlines have agreed to pay $504 million in fines to settle charges they conspired to fleece consumers by driving up cargo shipping prices.
The Justice Department called the case one of the largest antitrust settlements in U.S. history.

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Associate Attorney General Kevin O'Connor called the scam an "international price-fixing cartel" that cost consumers hundreds of millions of dollars between 2001 and 2006. In some instances, for example, fuel surcharges rose by 1,000 percent.

One of the four airlines -- Air France-KLM -- has agreed to pay $350 million of the total settlement. The other carriers are Cathay Pacific Airways, Martinair Holland and SAS Cargo Group

"American consumers and taxpayers pour billions of dollars each year into the pockets of these lawbreakers," said FBI Assistant Director Joe Persichini. "Let there be no mistake that people in corporations that take consumers and taxpayers in this way are thieves."

Authorities said executives from each of the airlines met repeatedly in the United States, Europe and Asia to cook up a price-fixing scheme that raised cargo rates, fuel surcharges and security costs for businesses and, ultimately, consumers. The cartel focused on goods shipped to and from the United States, including electronics, clothing, produce and medicines, O'Connor said.

The settlement agreement, filed Thursday in U.S. District Court in Washington, still requires a judge's approval.

Thursday's announcement marked the latest in a series of cargo shipping settlements over the last two years. Earlier, British Airways, Korean Air, Qantas and Japan Airlines filed similar agreements as part of the investigation.

In all, airlines have agreed to pay $1.2 billion in fines -- what O'Connor called "the highest total amount of fines ever imposed in a criminal antitrust investigation."

The investigation is continuing.

 

So our government hits up foreign companies for "breaking the rules" but in the states the large corporations skate free....

 

maybe I missed something, or maybe I'm just ignorant to how stuff works. But how can the US fine a foreign carrier? What's their jurisdiction when it comes to a company based in another country?

 

Ouch! Looks like we got hit to the tune of $60M according to the CEO update. Someone didn't do their homework on this one so I expect to see a scapegoat being fired in the next few days. This is nothing new though, there has been a lot in the price fixing arena lately.

As for foreign carriers being under US law. If a carrier flies into a country and is doing business there they are subject to that country's laws. Plus the US govt. could always threaten to revoke their right to fly into the United States as well.

Well.....my profit sharing just took a big hit.

 

The authority comes from the fact that they fly into the USA. Same way that the FAA can go audit a carrier/civil aviation authority overseas if it flies to or wants to fly to America.

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And the article says its about cargo shipping prices.Not pax tickets. Anyhow, I doubt this is why they are making money and most US carriers are not.

 

Are you serious with your question? If so, then how can EU fine Microsoft?

If you do business in a country/union/entity, etc you have to obey the laws of that country...

EU fine sends message to Microsoft and others

 

One for the Justice Dept. It's about time the US Justice Dept did something for the US Citizens. They should also do something about European Aircraft manufacturers such as Airbus being heavily subsidized and geting an unfair advantage over the US companies such as Boeing by undercutting Boeing for their airline and government contract bids. The Pentagon has awarded a multi billion dollar tanker contract to Airbus instead of retrofitting an existing Boeing aircraft which could have saved US taxpayers miliions of dollars.

 

This is a result of an ongoing investigation of cargo fuel surcharges. It doesn't have anything to do with the passenger side.

Remember that American and Braniff got caught up in something like this years ago.

You can raise prices all you want, you just can't aggree with your competitors before you do it. This is why we have in the US, this system of "I'll raise the price by $10 and see if other's match it".

 

I'm not an Airbus fan but I think this talk of the "heavy" subsidies Airbus is getting is a little unfair. When Airbus was a new company many moons ago - sure. Today? Not so much, at least not as much as Boeing is getting in subsidies through the military contracts - and yes, those ARE subsidies where the government pays for the most expensive phase which is research and development.

The tanker contract you are talking about was awarded to Airbus, or was it? Well, at first Boeing got it but come to find out the officials involved in the selecting process were being bribed by Boeing officials. Then Airbus gets the order but shortly thereafter Boeing Wins Refueling Debate in Court Ruling so the process will probably go back to square one - bidding all over again...

I think both sides try to be as deceptive as the law allows and sometimes they get caught crossing that line…

Personally I think Boeing should get this order but mainly because we cannot rely on the Europeans delivering parts to us if we were to find ourselves in a war they might be disagreeing with (what a surprise ) - but that's a different story...

Full disclosure – I’m born and raised in Europe…

 

There's one problem with your logic. Just like Airbus, Boeing aircraft are made with parts from all over the world.....including Europe.

I think the Pentagon's decision should solely be based on the best product for our military. If it turns out to be an Airbus, so be it.