Air New Zealand Agrees Settlement of Cargo Proceedings

Air New Zealand Agrees Settlement of Cargo Proceedings

The High Court today approved the settlement agreement between Air New Zealand and the New Zealand Commerce Commission which resolves long standing proceedings brought by the Commission against a number of airlines in 2008.  The settlement avoids further protracted and costly litigation.  The proceedings alleged agreements in relation to fuel and security surcharges on air cargo.

As part of the agreement, Air New Zealand acknowledges that, in the context of the definition of air cargo “markets in New Zealand” adopted by the Court in 2011, Air New Zealand should have obtained regulatory approval from the Ministry of Transport in New Zealand.  Surcharges were approved by regulators in Japan but Air New Zealand had not contemplated that the process of agreeing surcharges in Japan amounted to conduct in a market in New Zealand.  A similar acknowledgement has been made in relation to Malaysia where Air New Zealand’s local agent complied with local laws but no approval was sought in New Zealand.

Air New Zealand did not enter a plea to allegations of an understanding in Australia between February and September 2000 whereby an Air New Zealand manager and a Qantas manager were alleged to have supported each other over surcharges being applied to cargo shipped from Australia to New Zealand.

None of the understandings concerned cargo shipped from New Zealand to any other country and the surcharges did not exceed the substantially increased fuel costs being incurred at the time.

As part of reaching agreement with the Commission, Air New Zealand has agreed to pay a pecuniary penalty of $7.5 million.  This amount reflects Air New Zealand’s much larger share of the air cargo market than that of other airlines that have agreed penalties.  It includes a discount to reflect resolution prior to trial.  The Court acknowledged that Air New Zealand’s conduct was not as culpable as some of the other airlines pursued by the Commission.  Air New Zealand has also agreed not to pursue its Court of Appeal application in respect of the "market" definition reached by the High Court.

ENDS

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