Friday, October 29, 2010

Indictment Charges Former Airline Executives with Conspiracy to Fix Fuel Surcharges

This posting was written by John W. Arden.

Four former airline executives have been charged with a conspiracy to fix surcharges on air cargo shipments from the U.S. to South and Central American, following Hurricanes Katrina and Rita, in a one-count indictment returned yesterday in the federal district court in Miami.

Guillermo “Willy” Cabeza, George Gonzales, Rodrigo Hernan Hildalgo, and Luis Juan Soto allegedly conspired to suppress and eliminate competition by agreeing to impose an increase to fuel surcharges on air cargo from September 2005 to at least November 2005.

According to the indictment, the four executives engaged in discussions—including during a meeting near Miami’s Kendall-Tamiami Executive Airport—agreeing to impose an increase in fuel surcharges; participated in communications to implement and monitor the agreement; and accepted payments at collusive and noncompetitive rates.

The former executives are charged with price fixing in violation of the Sherman Act, which carries a maximum penalty for each individual of 10 years in prison and a $1 million fine. A fine may be increased to twice the gain derived from the crime or twice the loss suffered by victims of the crime.

Cabeza and Soto are former presidents of Miami-based air cargo carriers. Gonzales is the former chief commercial officer of a Peruvian air cargo carrier. Hildalgo is the former vice president of sales and marketing of a Miami-based air cargo carrier.

The indictment is the result of the Justice Department’s ongoing investigation into price fixing in the air transportation industry. Thus far, 18 airlines and 14 executives have been charged. More than $1.6 billion in criminal fines have been imposed, and four executives have been sentenced to serve prison time. Charges are pending against 10 individuals.

Further information is available here on the Department of Justice Antitrust Division’s website.

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