Slap In the Face as Court Annuls European Commission 790 Million Euro Air Freight Cartel Penalties

EUROPE – In an astounding reverse the General Court of the European Union today reversed a judgement of the European Commission thereby annulling €790 million in fines levied on several airlines for antitrust operations after they imposed fuel and security surcharges, particularly in the wake of the terrorist attacks in September 2001. The Court found there was a contradiction between the grounds of the decision and the ‘operative part’. That is to say some carriers were found responsible for infringements with which they could have no association as they were not employed on the routes concerned.

To be found guilty of the charges as levied by the Commission there has to be evidence that there was a single and continuous infringement composed of anticompetitive conduct for which all the participants are liable, irrespective of the routes concerned. After raiding the offices of the companies concerned in February 2006 the Commission ruled in November 2010 that there had been such infringements of EU competition rules within the European Economic Area and Switzerland and in September that year our story gave full details of the proposed penalties.

The operative part of the decision found that there had been four such infringements ranged across various routes and times with all carriers found guilty of some offences and fewer for the others. The Commission imposed fines on all the carriers except Lufthansa which had been granted immunity for assisting the prosecutors, something the company has a history of.

Upon appealing to the Court some of the carriers said that among other things the decision did not allow them to determine the nature and scope of the infringement or infringements that they were alleged to have committed. The Court said that judicial protection mandated that decisions made by the Commission must be ‘particularly clear and concise’ and that those found to be at fault must be able to understand and contest what they are accused of and the penalties arising.

Because the Commission rulings are binding on the national Courts these decisions must be free from ambiguity and capable of establishing clear mutual rights and obligations for those concerned. It is therefore a slap in the face for the European Commission that the Court ruled its judgement contains sufficient inconsistencies to be thrown out on several grounds including that the contested decision was liable to infringe the defence’s rights resulting in this annulment.

The companies which have had penalties annulled are Air Canada, Air France-KLM, BA, Cargolux, Cathay Pacific, Japan Airlines, LAN, Lufthansa, Martinair, Qantas, SAS, Singapore Airlines. We await with interest the next move of the Commission after it has considered the Court’s ruling which you can read in full here together with details of the penalties each was to have paid.