DOJ fines cargo airlines $500M for price fixing

Air France-KLM hit for $350M

By Dave Hannon -- Purchasing, 6/27/2008 8:55:00 AM

The Department of Justice has fined four international airlines more than $500 million after all four pleaded guilty to fixing cargo rates. Air France and KLM Royal Dutch Airlines will pay $350 million in total fines, the second-largest fine ever assessed in a criminal antitrust investigation by the Justice Department. The two operate under a common ownership.

Cathay Pacific Airways agreed to pay $60 million and Dutch airline Martinair will pay $42 million.

Associate Attorney General Kevin O'Connor called the scam an "international price-fixing cartel" that cost consumers hundreds of millions of dollars between 2001 and 2006. In some instances, for example, fuel surcharges rose by 1,000%, reports the Associated Press. Reportedly, executives from the airlines met repeatedly to organize the price-fixing scheme that raised cargo rates, fuel surcharges and security costs for businesses and, ultimately, consumers. The cartel focused on goods shipped to and from the U.S., including electronics, clothing, produce and medicines, O'Connor said.