Air Cargo Firm Agrees to Plead Guilty to Price Fixing, Pay Criminal Fine

This posting was written by John W. Arden.

Polar Air Cargo LLC has agreed to plead guilty and to pay a $17.4 million criminal fine for its role in a conspiracy to fix prices in the air transportation industry, the U.S. Department of Justice announced on September 2.

The air cargo firm joined and participated in a conspiracy to fix the cargo rates charged to some customers for international air cargo shipments between the U.S. and Australia from at least as early as January 1, 2000 through April 30, 2003, according to a one-count felony charge filed in the U.S. District Court for the District of Columbia.

The Long Beach, California company carried out the conspiracy by agreeing on certain components of cargo rates during meetings, in conversations, and through communications with co-conspirators. As part of the conspiracy, Polar Air Cargo monitored and enforced adherence to agreed-upon rates.

The price fixing charges carry a maximum fine of $10 million for offenses committed before June 22, 2004. The fine may be increased to twice the gain derived from the crime or twice the loss suffered by victims of the crime, if either amount is greater than the statutory maximum fine.

In the plea agreement, which is subject to court approval, Polar Air Cargo agreed to cooperate with the Justice Department’s ongoing antitrust investigation.

Polar Air Cargo becomes the 17th airline charged in an ongoing investigation into price fixing in the air transportation industry. More than $1.6 billion in criminal fines have been imposed. Four executives have been sentenced to serve prison time, while charges are pending against three other executives.

Airlines that have pleaded guilty to antitrust charges are British Airways Plc, Korean Air Lines Co. Ltd., Qantas Airways Limited, Japan Airlines International Co. Ltd., Martinar Holland N.V., Cathay Pacific Airways Limited., SAS Cargo Group A/S, Societe Air France, Koninklijke Luchtvaart Maatschappij N.V. (KLM Royal Dutch Airlines), EL AL Israel Airlines Ltd., LAN Cargo Airlines Co. Ltd., Areolinhas Brasileiras S.A., Cargolux Airlines International S.A., Nippon Cargo Airlines Co. Ltd., Northwest Airlines LLC, and Asiana Airlines Inc.

Airline executives who have pleaded guilty are Bruce McCaffrey of Qantas, Keith Packer of British Airways, Franciscus Johannes de Jong of Martinair, and Timothy Pfeil of SAS.

In August 2009, Jan Lillieborg, former vice president of global sales for SAS Cargo, was indicted for participating in a conspiracy to suppress and eliminate competition by allocating customers and coordinating surcharge increases for international air shipments to and from the United States.

On August 26, 2010, Joo Ahn Kang, former president of Asiana, and Chung Sik Kwak, former vice president of the Americas region of Asiana, were indicted for participating in a conspiracy to suppress and eliminate competition by fixing passenger airfares for travel between the U.S. and Korea.