Friday, October 1, 2010

More Freight Forwarders Shell Out In Air Cargo Price Fix Scandal

Six Major Groups Agree to Take Their Expensive Medicine
Shipping News Feature

US – After Kuehne and Nagel admitted colluding with others in a surcharge price fixing scandal yesterday it transpires five of the other freight forwarders accused by the US Department of Justice have also admitted their part in the affair and agreed to fines being imposed relating to the air cargo illegal shipping surcharge affair.

Altogether the six shipping groups have agreed to pay out a total of over $50 million for violating the Sherman Act, an offence carrying a maximum penalty of $100 million for each offence. The five other forwarders are Panalpina World Transport (Holding) Ltd., Schenker AG, BAX Global Inc. (now part of Deutsche Bahn), EGL Inc. (now part of CEVA Logistics)and Geologistics International Management (Bermuda) Ltd. (now Agility).

Panalpina tell us that under the terms of the plea agreement, which is subject to court approval, they will enter guilty pleas to three counts of conspiring to violate the Sherman Act, and will pay a fine of approximately $12 million. The plea agreement releases the company from further prosecution for any conduct related to the sale of international air freight forwarding services, and for conduct related to the imposition of certain enumerated surcharges in connection with the sale of international ocean freight forwarding services.

Panalpina say the conduct at issue in the DOJ settlement ended in 2007. Since that time, the company has worked to build a state-of-the-art compliance structure aimed at ensuring rigorous adherence to competition and other laws throughout the world.

Administrative proceedings related to such conduct are still ongoing in the European Union, in Switzerland and New Zealand. In Brazil authorities announced preliminary investigations against the freight forwarding industry in mid August 2010. More than a dozen airlines have settled with regulators—paying more than $1.5 billion in fines—amid probes into fuel surcharges and cartel agreements by regulators in Europe, North America and Asia that have also ensnared freight forwarders, U.S. railroad operators and truck manufacturers.

Despite protestations from the forwarding groups that the practices indulged in did not harm their customers, lawyers worldwide are rubbing their hands together as a raft of class actions by clients start to move forward.