The European Court of Justice, the highest judicial body in the European Union, today brought to a close one of the longest-running legal disputes in the global aviation sector, definitively upholding the imposition of huge financial penalties totaling more than 770 million euros (equivalent to 910 million dollars) on a coalition of the world's largest airlines.
This decisive ruling brings to a close chapters of litigation that lasted for more than a decade and a half, as the court rejected 12 out of 13 appeals filed by the convicted companies, thus confirming the validity of the measures taken by the European Commission to combat monopolistic practices harmful to free competition.
Details of the final ruling and rejection of appeals
Under the ruling issued by Luxembourg, sanctions were upheld against a number of aviation giants, including companies such as Air France-KLM, British Airways, Air Canada, Cargolux, Japan Airlines, and others. The court found that the evidence presented proved these companies' involvement in illegal price fixing.
In a minor part of the ruling, the judges accepted a partial appeal concerning technical errors in the mechanism for calculating the fine for one of the companies, which resulted in a slight reduction in the amount due from it, but the legal substance of the conviction remained firm and unshakeable for the rest of the members of the consortium.
Historical background: Years of price manipulation
The roots of this thorny issue go back to the period between 1999 and 2006, when the airlines involved formed what became known as a "cartel" to control global air freight prices. Instead of competing fairly to offer the best prices to customers, these companies secretly agreed to standardize and fix additional charges.
This illicit agreement included imposing uniform fuel surcharges, which had risen significantly during that period, in addition to security fees levied after the events of September 11th. Furthermore, the agreement extended to refusing to pay freight forwarders commissions on these additional charges, harming the interests of both shippers and end consumers.
A complex legal process and a stern European message
The road to this ruling was not easy; the European Commission issued its first decision to impose fines in 2010, but the General Court of the European Union overturned that decision in 2015 for procedural reasons related to the wording of the decision, and not because the charge was not proven.
In its determination to enforce competition law, the Commission revised its decision and corrected the procedures, issuing a revised ruling in 2017, which was definitively upheld today. Companies that proactively report violations (the whistleblower exemption scheme) are usually exempt from these fines, a role played by Lufthansa and its subsidiaries at the outset of the investigation, thus avoiding substantial penalties.
This ruling is a strong message from the European Union to all economic sectors, that manipulating the rules of free competition will not go unpunished, no matter how long the litigation takes and no matter how large the companies involved are, in order to protect the European market and consumers from monopolistic practices.
