Airline industry hits turbulence on shipping costs

After a long delay, the European Commission released findings Friday on an air cargo cartel.

Justice is getting closer for almost 1,500 companies across Europe, from flower and fruit importers to electronics manufacturers like Ericsson and Philips, that were drastically overcharged for shipping costs over six years.

After an unprecedented four-year delay, the European Commission published the results of its investigation Friday into an air cargo cartel that admitted to colluding to illegally setting prices. In a 224-page document, the Commission finally revealed details of its findings against 11 airlines that were fined €799 million for their pact that started in 1999.

The release of documents comes as appellate court hearings start Monday in Luxembourg, pitting the Commission against the airline industry, including British Airways, Lufthansa and Japan Airlines. The airlines have filed 10 appeals against the Commission’s decision, despite having admitted to the charges and settled related complaints in the US.

The findings are expected to fuel a handful of civil lawsuits for damages totaling €7 billion, marking the largest cartel action in Europe’s history and setting a potential legal precedent.

“It is a shame that there has been such a delay in publishing the decision,” said Martin Hyde, a lawyer and director of Claims Funding Europe, which has filed a lawsuit Amsterdam on behalf of some 200 companies.

He described the airlines’ hardball tactic as “pay-for-delay.”

For some shippers, such as flower exporters, air freight accounts for roughly a quarter of the total price. By some estimates, the cartel inflated those costs by an extra 25 percent.

The airline industry association did not respond to a request for comment.

The claimants harshly criticized the Commission for refusing to publish a non-confidential version of its decision. On the other hand, the airline industry was threatening to sue the Commission for releasing its findings, which it alleged could reveal confidential and sensitive material.

The Commission declined to comment publicly.

Peter Smith, a UK judge presiding over one of the civil cases, described the Commission’s lag as “molasses-like.”

Omni Bridgeway, a Dutch-based claims manager, has filed a lawsuit, together with the Cartel Compensation Foundation Initiative in Amsterdam, representing an estimated 700 alleged victims.

Similarly, Hausfeld, a US law firm, filed a lawsuit in London on behalf of more than 500 companies and wants to add thousands of Chinese companies to the case.

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Hausfeld has already won a settlement in the US from the airlines worth €1 billion.

In Germany, freight forwarder Schenker, a subsidiary of German giant Deutsche Bahn, is suing for €2 billion. Robert Bosch, a car parts supplier, and car-maker BMW have also reportedly taken their cases to court.

Other freight forwarders Panalpina and Agility are also reported to have filed legal actions.

“It is outrageous,” said Hyde. “The key players are big European airlines. It is somewhat ironic that they have paid out in the US but in their home countries they have not paid.”