European Commission Imposes Fines Totalling €776m on 11 Airlines: Take Two
Ireland's national day, St Patrick's Day, was not a lucky day for 11 airlines around the world.
On 17 March 2017, the European Commission imposed fines on 11 airlines totalling €776 million. The Commission believed that these airlines fixed the price of fuel and security surcharges on air cargo flights to and from the European Economic Area between 1999 and 2006. The airlines fined were Air Canada (€21m), Air France (€182m), KLM (€127m), Martinair (€15m), British Airways (€104m), Cargolux (€79m), Cathay Pacific (€57m), Japan Airlines (€35m), LAN (€8m), SAS (€70m) and Singapore (€74m).
If this sounds familiar then it is. The fines imposed now in 2017 were largely a re-adoption of the Commission's cartel decision adopted in 2010. The new fines are very similar to the earlier fines.
The 2010 fines were appealed to the General Court in Luxembourg by most of the airlines which were fined. In 2015, the General Court largely quashed the 2010 decision so the fines disappeared as a matter of law. The General Court found that the legally binding operative ground of the Commission's decision did not tally with the recitals in the decision (i.e., the statement of facts). Qantas did not appeal the fine imposed on it so did not benefit from the General Court's judgment – perhaps a sign that it is wise to appeal decisions.
The Commission has said that its readopted 2017 decision corrects the error identified by the General Court. However, the 2017 Commission decision could well be appealed again to the General Court and the appeal might well focus on the fact that the Commission did not afford the airlines the benefit of a "statement of objections" or a hearing before these fines were imposed. It will be interesting to see how any appeal will go.
The 2017 Decision does not address a fine to Qantas because the original decision remains in force. Martinair had its fine reduced from €29.5 million to €15.4 million because its turnover fell since 2011. There were no fines in 2010 for Lufthansa and Swiss International Airlines because they sought leniency in 2005 and informed the Commission about the case. The fact that an application could be made in 2005 and the case could still be running 12 years later shows the tenacity of the Commission! It will probably run for another few years if there is to be an appeal.
For further information, contact Dr Vincent Power or any member of the EU, Competition & Procurement Group at A&L Goodbody.
Date published: 20 March 2017