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Duo fined for fixing bid

8 Dec 2012 SYDNEY MORNING HERALD - MATT O'SULLIVAN



SINGAPORE AIRLINES and Cathay Pacific have copped fines totalling $23 million for their parts in a global air cartel, which included attempts by the Singaporean carrier to fix prices for transporting meat to feed American and Australian troops in the Middle East.

The latest fines take to $91 million the amount that 12 airlines, including Qantas, have been penalised in Australia for the freight cartel.

The fine imposed on Singapore's cargo unit comes after it admitted trying to fix rates with Malaysia Airlines for meat exports to troops stationed in the Middle East.

The attempt to fix those charges followed the United States decision in January 2003 to deploy about 35,000 troops to the Middle East, just before the invasion of Iraq. Australia also decided then to send military personnel to assist.

A Singapore Airlines executive emailed a colleague that he understood the "demand for meat in ME [the Middle East] has picked up due to the build-up of US troops".

"Only SQ [Singapore Airlines], MH [Malaysia Airlines] and EK [Emirates] are serious players," the executive emailed another Singapore colleague.

"[I've] told MH that we will up 20? if they are prepared to do likewise. He is confident EK will follow."

In the latest chapter in the unravelling of the cartel, the Federal Court in Sydney ordered Singapore and Cathay to pay fines of $11.75 million and $11.25 million respectively.

After Qantas was fined $20 million in 2008, the penalties imposed on the two Asian airlines are the second- and third-highest in Australia for illegally ramping up freight charges in concert with other airlines.

In October Emirates was fined $10 million for fixing fuel prices, a security surcharge and a customs fee on freight carried from Indonesia to Australia and other countries between October 2001 and May 2006.

The Australian Competition and Consumer Commission chairman, Rod Sims, said that the "sheer scale of the penalties will act as a strong deterrent" to any business considering cartel activity.

"We are really trying to send a signal that if you go and engage in cartel behaviour, you will get caught eventually," Mr Sims said.

Part of the fine against Singapore Airline relates to its admission that it fixed surcharges for fuel, security and customs fee for freight services from Indonesia to Australia.

The penalty against Cathay comes after it admitted that it tried to fix rates with Qantas for freight services between Hong Kong and Australia.

In September 2004 Cathay was operating a weekly 747 jumbo freighter between Hong Kong and Sydney, which was threatened by a new Qantas service. Cathay proposed Qantas lift its price by 25 per cent to the level it is charging.