Air NZ trying to delay cartel case, says Commission

Soon to retire Commerce Commission chair Paula Rebstock announcing the Air NZ price fixing cartel action last year. Photo/ Richard Robinson

The Commerce Commission says Air New Zealand is trying to delay proceedings aimed at determining whether the airline was part of an an international price fixing cartel.

Today the commission replied to a statement made yesterday by the airline, in which the airline said it had gone to the High Court to stop the commission "withholding evidence" in its air cargo litigation.

Air NZ wants the commission to withdraw orders imposed under Section 100 of the Commerce Act which prevent revelation of what is discussed by witnesses with the commission.

The airline said the orders left it unable to defend itself against any secret allegations.

The commission has alleged that airlines throughout the world, including Air NZ, operated a cartel to raise the price of freighting cargo by imposing fuel and security surcharges for more than seven years.

Air NZ denies the charge.

"Despite extensive reviews of our own files and interviews with key staff, Air New Zealand has not been able to identify any evidence of price-fixing or cartel behaviour," Air NZ general counsel John Blair said.

Today the commission said Parliament authorised it to impose the Section 100 orders to protect its investigation processes, in particular confidential information.

Commission general counsel Peter Taylor said the orders were a key means by which the commission could ensure targets of its cartel investigations could not tip each other off as to the commission's likely lines of inquiry following an interview with the commission.

"The orders are an important tool in the commission's battle to stamp out hard core cartel conduct - conduct that is often covert, of long duration, difficult to detect and internationally recognised as doing enormous harm to the economy," said Taylor.

"Such orders provide protection to witnesses and other parties that are forced to respond to the commission's investigations."

The orders did not prevent employees or other witnesses from discussing with their employer the facts of a case as they knew them.

Yesterday Air NZ counsel John Blair said the airline had cooperated fully with the commission throughout its investigation, providing hundreds of thousands of documents and making many current and former employees available for interview from around the world.

But today Taylor said the commission had offered to meet and discuss the investigation with Air NZ if it was prepared to cooperate with the investigation.

"Air New Zealand has refused to do so, on the basis that it could not risk being seen to cooperate due to the risk of jeopardising its defence of a class action brought against it and other airlines in Australia."

The commission had offered to amend the Section 100 orders so as to allow Air NZ's lawyers access to the commission's confidential areas of inquiry.

"Air New Zealand refused this offer, preferring instead to file these proceedings," Taylor said.

The commission's allegations had been specified in a statement of claim, and Air NZ had not asked the commission to provide further particulars of the claim, which it could do if it were uncertain of any aspects.

Air NZ already had much of the same information as the commission, from which it was able to see the basis for the commission's claim, and current proceedings allowed for standard means of exchanging information, Mr Taylor said.

Overseas competition authorities are also investigating the air cargo market, with courts in the United States having already awarded penalties of US$1.2 billion ($2.2b) against airlines for participation in a cartel that increased air cargo rates to and from the US.

- NZPA