Cartel case: Air NZ price fixing "hurt consumers"

Photo / NZ Herald

Air New Zealand will pay more than $8 million in penalties for its role in air cargo price fixing, offending which a High Court judge says hurt consumers and was at the "serious end of the spectrum."

The High Court ruled yesterday the agreed penalty of $7.5 million was appropriate but the airline - almost 74 per cent owned by the taxpayer - must pay court costs of $259,000 and $300,000 towards the Commerce Commission's investigation costs.

While the agreement ends the case here, Air New Zealand is still before the Australian Federal Court over collusion with other airlines and it has also been named in class action launched across the Tasman.

The airline has said its spent $10 million on the case launched by the commission against 13 cargo carriers launched in 2008. Then Air New Zealand accused the commission of "grandstanding to justify its existence" in the case that related to fuel and security surcharges imposed with Qantas for a time in 2000 and in Japan and Malaysia following the 2001 terror attacks.

In his ruling yesterday Justice Geoffrey Venning said Air New Zealand's conduct in the case was "at the serious end of the spectrum"and was anti-competitive.

"The carriage of goods to New Zealand, including from Australia, Japan and Malaysia is important for the supply of goods and services throughout the New Zealand economy."

While the surcharges comprised only part of the total charges they would have affected price competition, said Justice Venning.

Relevant surcharge revenue was $4.2 million and the conduct of Air New Zealand was worse than several other airlines, with the exception of Qantas and Cargolux.

"Given its position in the New Zealand market place, the conduct of Air NZ is likely to have had a greater impact on the New Zealand markets and consumers."

Air New Zealand was the last airline to settle faced a maximum penalty of $10 million but the judge reduced the figure for its admissions, co-operation with the commission and its clean record on Commerce Act contravention.

In a statement the airline said the settlement avoided "further protracted and costly litigation" and none of the settlement related to cargo shipped from New Zealand to any other country.