Cargo e o antitruste

By Jens Flottau

CARGO IN CAHOOTS?

Much of the air cargo industry is potentially facing severe fines from international competition authorities. Investigators on three continents are trying to determine whether a group of cargo airlines engaged in anti-competitive behavior such as illegal fixing of rates and surcharges.

Last week, officials raided offices of many airlines in Frankfurt, Chicago, San Francisco, New York, Seoul and other cities. In some cases, computers were confiscated as evidence. Investigators requested information from several more carriers without searching facilities. While the investigation's primary focus is in Europe, authorities in Asia and the U.S. cooperated, too, with the European Commission and the U.S. Department of Justice understood to be the driving forces.

"The commission has reason to believe that the companies concerned may have violated" antitrust laws, the EC says in a statement. A spokesperson for the Justice Dept. confirms that "the antitrust division is investigating the possibility of anti-competitive practices in the air cargo industry."

As of late last week, at least 16 airlines had either been raided or contacted with requests for information: Japan Airlines, Nippon Cargo Airlines, Cathay Pacific, Singapore Airlines, Korean Air, Asiana, Lufthansa Cargo, British Airways, Virgin Atlantic, Air France-KLM Cargo, Cargolux, SAS Cargo, American Airlines, United Airlines, Polar Air Cargo and LAN Cargo. United's office in Frankfurt was searched, while American received a subpoena only. Being contacted by investigators does not mean that an airline is charged with collusion or price-fixing activities.

The investigation appears not to follow the contours of cargo alliances such as WOW or SkyTeam Cargo, as a number of independent cargo airlines are also subject to the inquiries. But integrators like FedEx, UPS and DHL are not accused of anti-competitive behavior.

The airlines pledged to be fully cooperative in the upcoming process, although most declined to discuss the allegations. The investigation is expected to take several months at least.

Authorities kept silent about exactly what they believe could make an anti-trust case against the various airlines. SAS Group revealed part of what it has been accused of: "According to the European Commission, cooperation has involved routes within Europe as well as to countries outside the European Union. The alleged competition limiting cooperation has supposedly been carried out since 2000 and mainly involved agreements regarding surcharges to offset external cost increases, such as fuel surcharges, costs for additional security measures (after the attack in the U.S. in September 2001) and surcharges for war-risk insurance premiums (applied in conjunction with the outbreak of war in Iraq in 2003)."

Other industry sources say that the investigation also includes alleged illegal cooperation on air cargo rates. The EC would not comment on whether it is looking at fuel surcharges that have contributed significantly to European airlines' financial improvement.

Cargo operators already can exchange data on a limited basis, using the International Air Transport Assn.'s tariff conference system, in which 95 cargo airlines participate.

The EC has expressed concern about some of the data exchange--which involves face-to-face meetings between airline representatives--that it fears could lead to collusion. The EC and airlines are now working on a way to maintain the tariff conference process, and benefits customers are seen gaining from it, such as interlining, while satisfying regulators' concerns. An IATA official says the organization has not been subpoenaed in the current investigation and insists the information-sharing under its tariff conferences is above-board and has been accepted for six decades.

Within the EU, fines in antitrust cases can theoretically amount to 10% of a company's annual sales, although in practice they have ended up in the 2-3% range, observers said last week. In the biggest EU antitrust case, pharmaceuticals giant Roche was fined 462 million euros ($550 million) for allegedly fixing the price of vitamins.

MANY CARGO AIRLINES have introduced fuel surcharges to cope with the rising price of jet fuel. In most cases, airlines publish surcharge indices on their web sites to make the process transparent to customers. For instance, SAS Cargo says it is publishing its own index based on spot prices at five locations worldwide that are used by IATA. However, SAS points out that it "is not in any way related to IATA--or any other index that may or may not be in use by any other airline or airline organization, international or national."

Other fuel price indices are published by FedEx, AA Cargo, Lufthansa Cargo and others. Surcharges are based on index development, with a two-week notice in some cases.

The airlines have tended to raise and lower fuel surcharges at similar times. For example, Air France Cargo increased the charge per kilo to 0.50 euros from 0.45 euros on Feb. 14. Lufthansa Cargo is raising the surcharge to 0.50 euros from 0.45 euros effective Feb. 20. SAS Cargo announced the identical measure for the same day, and Cargolux for Feb. 17.

AA Cargo also last Friday raised the fuel surcharge for international freight originating in the U.S. to $0.50 from $0.45. American's cargo division says the index is based on the Weekly Petroleum Status Report published by the Energy Dept. It is "calculated by averaging the weekly spot prices in the New York harbor, U.S. Gulf Coast, Los Angeles, Rotterdam and Singapore markets."

On Oct. 17, 2005, Lufthansa Cargo increased its surcharge per kilo to 0.55 euros from 0.50 euros, while Cargolux went to 0.60 euros on Oct. 28. In a randomly chosen example, both Cargolux and Lufthansa reduced the surcharge to 0.55 euros from 0.60 on the same day, Nov. 21.

An attorney with knowledge of the case says investigators are likely to look for communication between airlines to support the claim that in some cases they jointly imposed surcharges.

With Robert Wall in Paris and Jim Ott in Cincinnati.