The European Court of Justice (ECJ) has upheld fines totaling €169 million imposed by the European Commission on a number of freight forwarding companies and their current or former subsidiaries for their participation in cartels within the international air cargo services sector that were judged to have collectively created or fixed the levels of various surcharges.
The cases relate to fines imposed by the Commission in March 2012 on firms including Kühne + Nagel, Panalpina, CEVA/EGL, Schenker/Deutsche Bahn, and UTi for the companies’ participation between 2002 and 2007 “in various agreements and concerted practices on the market for international air freight forwarding services”. The appeal to the ECJ followed unsuccessful attempts at the General Court of the European Union for the annulment of the Commission’s March 2012 decision against the forwarders, or for a reduction in their respective fines, although in its February 2016 decision, the General Court had reduced a fine of €3.07 million imposed initially on UTi Worldwide to €2.97 million.
Kühne + Nagel, Panalpina, and Schenker/Deutsche Bahn each brought an appeal before the ECJ asking that the General Court’s judgments be set aside − an appeal that was only allowed to relate to points of law. But in its decision on 1 February 2018, the ECJ said: “The Court of Justice rejects all the arguments put forward by those companies and upholds the amount of the fines imposed. It declares in particular that the General Court was correct in holding that it is appropriate to base the calculation of the amount of the fines on the value of sales associated with freight forwarding services as a package of services on the trade routes concerned.”
The Commission concluded, back in March 2012, that the anti-competitive conduct of the companies, which agreed on the fixing of various pricing mechanisms and surcharges, gave rise to four distinct cartels.
The ‘new export system’ (NES) cartel concerned a pre-clearance system for exports from the UK to countries outside the European Economic Area that was introduced by the UK authorities in 2002. A group of freight forwarders agreed to introduce a surcharge for NES declarations.
The ‘advanced manifest system’ (AMS), introduced after the terrorist attacks of 11 September 2001, describes legislative provisions of the United States customs authorities that require companies to submit in advance data on goods that they intend to ship to the United States. A number of freight forwarders coordinated the introduction of a surcharge applicable to the AMS service, for the electronic communication of the data concerned to the United States authorities.
The ‘currency adjustment factor’ (CAF) cartel was designed to achieve agreement on a common tariff strategy in order to deal with a risk of a fall in profits owing to the decision of the People’s Bank of China in 2005 that it would no longer peg the Chinese currency (renminbi or RMB) to the United States dollar (USD). A number of international freight forwarders decided to convert all contracts with their customers into renminbi and to introduce a CAF surcharge, setting the amount.
Lastly, the ‘peak season surcharge’ (PSS) cartel concerned an agreement between a number of international freight forwarders relating to the application of a temporary rate adjustment factor. That factor was imposed as a reaction to increased demand in the air freight forwarding sector at certain times, which led to a shortage of transportation capacity and an increase in transport rates.
The Commission said the agreements had been designed to protect the freight forwarders’ margins.
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