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The High Court’s decision is the final (Australian) chapter in the long running Air Cargo Cartel matter. Between 2008 and 2010, the Australian Competition and Consumer Commission (ACCC) issued proceedings against many international airlines alleging price-fixing and other anti-competitive conduct in relation to certain surcharges on international air cargo services flying to Australia. Most airlines settled with the ACCC, with the Federal Court imposing penalties totalling $98.5 million.
Air New Zealand and Garuda did not settle. They claimed, among other things, that Australian courts had no jurisdiction because the relevant market for air cargo services in which the impugned conduct took place was not a market in Australia.
The airlines were successful at first instance with the primary judge (Perram J) finding that despite the airlines collusion with respect to fixing the price of surcharges, there was not a market in Australia for the relevant air cargo services the subject of the conduct. His Honour treated the place where the ultimate choice of airline was effected (referred to as ‘the switching decision’) as critical to the location of the market and so identified markets in Hong Kong, Singapore and Indonesia, but not Australia.
The ACCC appealed to the Full Federal Court, which held by a majority (Dowsett and Edelman JJ, Yates J dissenting) that the collusive conduct did take place in a market in Australia and that Air New Zealand and Garuda therefore contravened the price fixing provisions under the Trade Practices Act 1974 (TPA) (now the Competition and Consumer Act 2010 (CCA)). The majority said that defining a ‘market’ for the purposes of the TPA involved a “flexible assessment” of various matters that were not limited to questions of substitutability, and that an important part of market definition was whether at least part of the relevant services were provided in Australia.
A unanimous High Court upheld the decision of the Full Federal Court, finding that the relevant markets were ‘markets’ in Australia. You can access the full judgment here.
Key findings of the Court included:
If you compete to sell goods or services to Australian businesses or consumers, or acquire goods and services from Australian businesses, it is likely that you will be subject to Australian competition laws and accordingly you should obtain legal advice if your conduct may have an adverse effect on competition. This is so even if, on their face, all of your conduct and operations may take place outside Australia.
Johnson Winter & Slattery represented Qantas in relation to the air cargo cartel investigation and related penalty proceedings.
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