Air France-KLM and three other airlines have agreed to pay fines totaling $504 million to settle US price-fixing charges involving vast shipments of consumer goods ranging from electronics to medicines, the US Justice Department said last night.
The plea deal was the latest in a series of airline cargo price-fixing settlements and boosted the total fines from the US antitrust investigation to a record $1.27 billion.
Under the new agreement, Air France-KLM will pay $350 million, the second-largest criminal fine ever obtained by the Justice Department's antitrust division, the government said in a statement.
Air France and KLM operated as separate companies at the start of the price-fixing investigation until May 2004, when they combined under a single holding company.
Cathay Pacific will pay a $60 million fine while Scandinavian airline SAS will pay $52 million and Martinair $42 million, the Justice Department said.
Martinair is 50-50 owned by Air France-KLM and Denmark's A.P. Moller-Maersk.
"The airlines each engaged in a conspiracy to suppress and eliminate competition by fixing the cargo rates charged to customers for international air shipments," the government said in a statement.
KLM and Air France issued separate statements saying they were committed to complying with US antitrust laws.
"We have taken thorough steps across the organization to prevent recurrence, as Air France is committed to the highest standards of Corporate Governance," Air France Chief Executive Officer Jean-Cyril Spinetta said in a statement.
Shares in Air France-KLM declined 4.43 per cent to €15.54 in trading yesterday, while SAS shares fell 7.71 per cent.
The settlement is part of a wide-ranging investigation of the air cargo industry by the Justice Department's antitrust division.
US authorities said the investigation is still ongoing but declined to say what other companies or individuals might be charged in the future.
According to US authorities, the airline price-fixing conspiracy began as early as 2001 and continued until at least 2006. Fuel surcharges imposed by some of the airlines soared as much as 1,000 per cent during the period, far outpacing the rise in fuel costs.