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The Commerce Commission is under fire from the industry body representing airlines, which says allegations that price fixing occurred under its auspices are "without merit".
On Monday, the commission announced it was taking legal action against 13 airlines for cartel activity affecting nearly $3 billion worth of freight to and from New Zealand.
The commission alleged that airlines first entered into an illegal global agreement in 1999/2000 under the auspices of the International Air Transport Association (IATA), resulting in fuel surcharges for seven years.
The allegations also involved a series of regional price-fixing agreements. It is also alleged that a number of airlines conspired to price fix through the imposition of a security surcharge immediately after the 9/11 terrorist attacks.
Yesterday IATA said the commission was "inaccurate and without merit".
IATA, which represents 230 airlines - did consider and adopt a fuel surcharge mechanism in the late 1990s through properly convened meetings in accordance with established procedures, it said. That was filed with Governments around the world as was customary with IATA resolutions under the usual condition that it would not come into force until receiving necessary regulatory clearances.
"As these approvals were not forthcoming, the surcharge resolution was not declared effective by IATA," the organisation said.
"In fact, once the US Department of Transportation denied granting approval to the resolution, IATA promptly informed its airline members that it would not be declared effective and that any decisions to impose a fuel surcharge would have to be made unilaterally."
The association said it strictly adhered to all applicable competition laws around the world, including those of New Zealand, and maintained "a robust anti-trust compliance culture" and would continue to co-operate fully with the investigations by the Commerce Commission.
An IATA spokesman in Singapore said the body had no power to sanction member airlines that had admitted being part of cartels. A commission spokeswoman had no comment on the IATA statement.
Air New Zealand is one of the airlines in the gun here and hit out strongly at the commission for grandstanding. It said the commission had been unable or unwilling to provide any evidence to show the airline had breached any laws.
However Qantas and British Airways are co-operating with the commission after pleading guilty in other countries to operating in international cartels linked to the activity alleged in New Zealand.
Dozens of airlines have been investigated and so far some have paid billions of dollars in fines and penalties and up to three executives have been sentenced to jail.
Last week the Federal Court of Australia upheld the A$20 million fine imposed on Qantas for its role in an international cartel that colluded on air cargo fuel surcharges between 2002 and 2006 after being convicted in the United States of similar offences.
Airlines are also facing legal action on another front.
The Australian law firm Maurice Blackburn has begun an A$200 million class action against Qantas and six other airlines, including British Airways and Air New Zealand, for allegedly fixing freight rates.
Hunting cartels
* Cartels make consumers and other businesses pay inflated prices for goods. In the airline case the alleged figure is $600 million over seven years.
* The Commerce Commission will push for millions of dollars in fines for any airlines convicted.
* A High Court date for the case will be set early next year.by Grant Bradleyaviation reporter
