Air NZ appeal on Australian cartel case rejected by High Court

An Air New Zealand A320. Photo / Ngaire Ackerley

Australia's High Court has dismissed appeals by Air New Zealand and PT Garuda Indonesia over a 2016 ruling that agreed surcharges on cargo breached that nation's price fixing laws.

The two are the only airlines of 15 that haven't settled with the Australian Competition and Consumer Commission since the Australian regulator began proceedings for price fixing on air cargo at ports outside of Australia destined for that nation. Total fines of A$98.5 million were imposed by the courts against the 13 airlines that settled, with the largest, A$20 million, imposed on Qantas Airways.

The original court action, brought by the ACCC, was dismissed in 2014 in a ruling that found the behaviour didn't occur in a "market in Australia" as was required by the Trade Practices Act 1974 that was in force at the time. The ACCC appealed that ruling to the full Federal Court, which took the regulator's side in 2016.

The High Court unanimously dismissed appeals by each airline and held that all aspects of the market, including the presence of customers in Australia, need to be considered in deciding whether a market is 'in Australia', the ACCC said in a statement.

The case will go back to the Federal Court for decisions on relief, including penalties.

"How a market is defined, including considerations of whether conduct occurs in Australia, are critical issues to the understanding and interpretation of Australian competition law," ACCC Commissioner Sarah Court said. "Today's judgment sends a clear message that the ACCC is committed to pursuing cartel conduct that impacts on Australian business and consumers."

The Australian action is one of a number that has embroiled major airlines, including a US class action filed in 2006 on behalf of six freight forwarders and has been led by global litigation firm Hausfeld that has seen 26 carriers cut settlement deals totalling US$1.19 billion. In that case, Air New Zealand and Air India are the only carriers left defending the civil lawsuit.

In New Zealand, the Commerce Commission reached settlements with 11 carriers, including Air New Zealand, securing penalties totalling $45 million, or about 10 percent of the revenue generated from air freight forwarding services in and out of New Zealand in 2006.