Australia fines Thai Airways $9.6m for cartel conduct

Australia fines Thai Airways $9.6m for cartel conduct

THAILAND - Thai Airways International has been slapped with a fine of 7.5 million Australian dollars (S$9.6 million) for engaging in cartel conduct, a week after Singapore Airlines Cargo and Cathay Pacific Airways were ordered to pay a total of A$23 million in penalties in the same proceedings.

THAI president Sorajak Kasem-suvan said settling the case was the best choice, given the high possibility that the company would lose if it fought it in court and have to pay A$610 million.

The fine will be paid from the company's reserves set aside against disputes. It will be paid in seven instalments over three years.

"The case stemmed from an agreement among 15 airlines in 2009 on cargo surcharges, reached without knowledge that it was in violation of the law. I can assure that this will not happen again," Sorajak said. A source at THAI said it had no plan to impose disciplinary action on company officers involved in the agreement.

The Australian Competition and Consumer Commission's action against THAI formed part of larger cartel proceedings taken against a number of international airlines, and total fines ordered in the entire proceedings have reached A$98.5 million. Among them, Qantas Airways was fined A$20 million, Singapore Airlines A$12 million, and Emirates A$10 million.

The ACCC's trial against Air New Zealand and Garuda Indonesia continues in the Federal Court in Sydney.

THAI informed the Stock Ex-change of Thailand yesterday that it had paid the fine and costs from its own reserves.

The airlines were charged with violating Australia's Trade Practices Act 1974 (now the Competition and Consumer Act 2010).

"The court has now ordered total penalties in Australia of almost $100 million. The $7.5-million penalties ordered against Thai Airways have contributed to the highest total penalties resulting from a single ACCC investigation," commission chairman Rod Sims said in a statement released yesterday.

"Thai Airways is the 13th inter-national airline to have admitted to engaging in cartel conduct in Australia and to have penalties ordered against it."

Delivering the judgement, Justice Anna Katzmann said: "THAI accepts that the contraventions were very serious. This was deliberate, systematic conduct involving senior staff at the Thai station in Indonesia. For the understandings to be effective, they required the participation of all players in the market including THAI."

The ACCC commenced proceedings against the airlines in 2009, alleging that they engaged in cartel conduct related to fuel and other surcharges.

As part of the settlement, Thai Airways admitted to reaching and giving effect to price-fixing understandings related to a fuel surcharge, security surcharge and customs fee for the carriage of freight from Indonesia to Australia.

The court ordered THAI to pay $7.5 million in penalties and a further $500,000 in costs, bringing the total penalties ordered in the entire proceedings to $98.5 million. It also issued an injunction restraining the airline from engaging in similar conduct for a period of five years.

Injunctions provide an additional deterrent and reassurance that the likelihood of repeat conduct is reduced, as reoffending would constitute both a breach of the act and contempt of court, which carries significant penalties.

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