FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Japan Airlines International Co Ltd [2011] FCA 365

THE COURT ORDERS THAT:

1.    The respondent pay the Commonwealth of Australia within 14 days of the date this order is made a pecuniary penalty in the total sum of $5.5 million in respect of contraventions of section 45(2)(a)(ii) and (b)(ii) of the Trade Practices Act 1974, now the Competition and Consumer Act 2010 (the Act), in that:

1.1.    the respondent:

1.1.1.    in or about December 2003, reached understandings with certain of its competitors for the supply of services, from Singapore to destinations throughout the world including Australia, for the carriage of air cargo containing a provision that they would each impose a charge of a specified amount, described as a fuel surcharge, in respect of those services; and

1.1.2.    on or about 23 January 2003, reached an understanding with certain of its competitors for the supply of services from Singapore to destinations throughout the world including Australia for the carriage of air cargo containing a provision that they would not discount a charge, described as an insurance and security surcharge, in respect of those services;

1.2.    the provisions of the said understandings had the effect of fixing, maintaining or controlling prices for the said services within the meaning of section 45A of the Act and are therefore deemed to substantially lessen competition within the meaning of section 45(2)(a)(ii) and (b)(ii) of the Act; and

1.3.    the respondent gave effect to those provisions:

1.3.1.    of the understandings referred to in 1.1.1 in the period from December 2003 to October 2005 inclusive; and

1.3.2.    of the understanding referred to in 1.1.2 from January 2003 until no later than October 2006 inclusive.

AND THE COURT ORDERS BY CONSENT THAT:

2.    The respondent be restrained, for a period of five years from the date of this order from making, arriving at, or giving effect to, any contract, arrangement or understanding with any of its competitors for the supply of services of the carriage of international air cargo, containing provisions which have the effect of fixing, controlling or maintaining the price or any part of the price at which it or any of them will supply those services in competition with each other unless:

2.1.    the said contract, arrangement or understanding does not involve or relate to the carriage of goods to or from Australia;

2.2.    the said contract, arrangement or understanding is necessary for the purpose of interlining between two or more carriers in the course of supplying services of the carriage of international air cargo; or

2.3.    the respondent is specifically authorised to do so under section 88 of the Act or any other Australian statute in accordance with section 51 of the Act.

3.    The respondent be restrained for a period of five years from the date of this order, from entering into, or giving effect to, any contract, arrangement or understanding with any of its competitors for the supply of services for the carriage of air cargo containing provisions to the effect that any of them will propose, develop, prepare, follow, implement, adopt or otherwise use any index, model, methodology or formula for the change of prices or any part of prices to be charged by any of them for services provided or which would otherwise likely be provided in competition with any other of them unless:

3.1.    the said contract, arrangement or understanding does not involve or relate to the carriage of goods to or from Australia;

3.2.    the said contract, arrangement or understanding is necessary for the purpose of interlining between two or more carriers in the course of supplying services of the carriage of international air cargo; or

3.3.    the respondent is specifically authorised to do so under section 88 of the Act or any other Australian statute in accordance with section 51 of the Act.

4.    The respondent pay the applicant within 14 days of the date this order is made a contribution toward its costs of and incidental to these proceedings in the sum of $200,000.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1    Having reviewed the very comprehensive joint submissions and the statement of agreed facts, I am satisfied that the proposed penalty is within the range that the Court would fix if it were left to itself in this matter. Of course, that amount of $5.5 million is not necessarily at the precise point in the range which, uninstructed by comprehensive submissions of the kind that I have just mentioned, I would have reached. Nevertheless, because the submissions have been so comprehensive and appear to have covered all of the relevant principles which the authorities indicate have to be taken into account in an exercise of this kind, I am persuaded to make the order.

2    I am also comforted by the fact that penalties arrived at in the same way have been imposed on other airlines for contraventions similar to those which have been admitted by the respondent, Japan Airlines International Co Ltd. In those circumstances I shall make orders in terms of the short minutes which have been submitted mutually by the parties. That minute will be initialled and may remain on the file.

Associate:

Dated:    13 April 2011