Qantas enters Plea Agreement with US over illegal price fixing

Qantas has announced that it has entered a Plea Agreement with the US Government to settle its liability in the US resulting from illegal price fixing conduct within its freight division.

Qantas CEO Geoff Dixon said the airline had agreed to pay a fine of US$61 million and that the illegal conduct involved fuel surcharges in the international air cargo market between 2000 and 2006.

“Similar investigations to those being carried out by the US Department of Justice (DOJ) are being undertaken by antitrust regulators in other countries, including Australia.

“We understand more than 30 other airlines are included in these investigations,” he said.

Dixon said upon being advised of the allegations, in May 2006, Qantas had cooperated fully with investigations by the DOJ and other antitrust regulators.

“These investigations confirmed that the practices adopted by Qantas freight and the cargo industry generally to fix and impose fuel surcharges breached relevant antitrust laws,” he said.

The facts revealed by the investigation related only to Qantas’ Freight division and did not in any way involve the company’s passenger business, he added.

“Qantas takes its obligations to comply with the law very seriously.

“We have a comprehensive competition compliance program in place, and expect all of our employees to comply with these requirements at all times,” he said.

“In this case, Qantas did not meet this expectation. The conduct was wrong and we apologise unreservedly for this.”

Dixon said the agreement entered into by Qantas settled the criminal liability in the US for Qantas and all of its employees who had not been specifically excluded from the Plea Agreement.

“All investigations have confirmed that knowledge of the conduct was confined within the Qantas freight division.

“Four past and two current employees of Qantas freight have been excluded from the Plea Agreement and the DOJ has reserved the right to investigate these cases further.

“This does not mean the individuals have been involved in any illegal conduct nor that the DOJ would prosecute them.

“The two current employees of Qantas freight who have been excluded from the Plea Agreement deny involvement in any illegal conduct.”

Dixon said Qantas would continue to cooperate with the investigations being undertaken by the DOJ and other antitrust regulators, which could take up to two years to complete.

“Our 2006/07 financial statements included a US$40 million provision for the US liability.

“We do not believe this or any further financial penalties will materially affect future operating results.

Report from Sydney