Air France KLM fined $350 million for rate fixing

The Air France-KLM Group, the largest European carrier, has agreed to pay a fine of $350 million for criminal activity and to plead guilty to being part of a world-wide conspiracy to fix air cargo rates.

The U.S. Department of Justice has indicated that the fine is the second-highest ever levied by courts in the U.S. for criminal price-fixing activity - assuming the Air France-KLM plea agreement is accepted by a federal judge in the U.S. Air France-KLM, along with three other airlines, has agreed to pay a total of $504 million in fines as part of the plea arrangement, the Justice Department reported.

As part of the agreement, Cathay Pacific Airways Ltd. will pay $60 million, SAS Cargo Group will pay $52 million and Martinair Holland, a unit of KLM will pay $42 million.

Associate Attorney General Kevin O’Connor commented to reporters that price-fixing “undermines our economy and harms the American people,” “Consumers and thousands of businesses — from the corner store to the biggest corporation — rely on the air transportation industry to provide the products we buy, sell and use every day.”

The companies had admitted to their involvement in fixing cargo rates, as well as fuel surcharges, and security surcharges that were imposed after the September. 11, 2001, terrorist attacks in the U.S, O’Connor noted.

The fuel charges that were imposed by some airlines “rose by as much as 1,000 percent in the course of the conspiracy, far outreaching any increase in fuel costs,” O’Connor added.

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