4 Airlines Plead Guilty to Price-Fixing

Four international airlines agreed to plead guilty and pay $504 million in criminal fines to settle charges that they conspired to fix air cargo rates, the Department of Justice said yesterday.

Air France and KLM Royal Dutch Airlines, which operate under common ownership, agreed to pay $350 million in total fines. Associate Attorney General Kevin J. O'Connor, who announced the plea agreements, said the Air France-KLM fine was the second-largest in a criminal antitrust investigation by the department.

In addition, Hong Kong's Cathay Pacific Airways agreed to a fine of $60 million, Dutch carrier Martinair agreed to pay $42 million, and Denmark's SAS Cargo Group agreed to a $52 million fine to settle similar charges. The settlement was filed yesterday in U.S. District Court for the District of Columbia and is subject to a judge's approval.

The guilty pleas are the latest to arise from a multinational antitrust investigation into the air transportation industry by investigators on both sides of the Atlantic. In yesterday's filing, the government accused the carriers of trying to artificially set prices for base cargo rates as well as fuel and other surcharges in e-mails and during meetings in the United States and Europe.

O'Connor said the conspiracy, which began as early as 2001 and continued through 2006, affected billions of dollars in shipments of consumer goods, including electronics, clothing, produce and medicines.

"These enforcement actions demonstrate the antitrust division's successful efforts to aggressively investigate and prosecute illegal cartel activity -- here and abroad -- in order to ensure that American consumers and businesses are not harmed by illegal anticompetitive activities," O'Connor said.

In separate statements, the chief executives of Air France, KLM, SAS and Cathay said their companies had taken steps to comply with U.S. antitrust laws. Officials at Martinair could not be reached for comment. The fines come at a time when high oil prices are causing many airlines to cut routes, trim workforces and consolidate.

"We have taken thorough steps across the organization to prevent recurrence, as Air France is committed to the highest standards of corporate governance," Jean-Cyril Spinetta, chairman and chief executive of Air France, said in a statement.

The announcement yesterday follows several investigations of other carriers. In August, British Airways and Korean Airlines pleaded guilty and each paid $300 million in fines for their roles in fixing prices on air fuel surcharges for passengers, who were charged an extra $110 per ticket in 2006 for round-trip fares. U.S. carriers have not been implicated.

Qantas Airways has pleaded guilty to price-fixing and paid a $61 million fine, and Japan Airlines pleaded guilty to the same and paid a $110 million fine, according to the Justice Department. A Qantas executive agreed to serve eight months in jail for his role in the conspiracy.

O'Connor said the Justice Department's investigation is ongoing. The European Commission is conducting a separate investigation into carriers' air cargo operations. O'Connor declined to say whether U.S. airlines could face charges in that investigation.