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Probe over alleged air cargo price-fixing widens

Feb 15, 2006 | AP

More than a dozen airlines around the world had their offices searched or were otherwise contacted by U.S. and EU investigators probing the possibility of illegal price fixing in the air cargo business.

Officials with the European Commission and U.S. Department of Justice have provided few details about the probe and the searches that were carried out on Tuesday.

However, one of the airlines targeted, SAS AB’s SAS Cargo in Copenhagen, Denmark, said the EU has alleged that cooperation among airlines began in 2000 and involved agreements about surcharges imposed by airlines to offset certain external costs.

Among the costs, according to SAS, are surcharges on fuel, added security after the Sept. 11 attacks and premiums for war-risk insurance after the start of the war in Iraq. SAS said in a statement it does not suspect any violations at its operations.

The raids on Tuesday involved only possible price fixing in air cargo, EU antitrust spokesman Jonathan Todd said Wednesday in Brussels, Belgium.

When asked if there was also an investigation into collusion in setting fuel surcharges for passenger flights, he said: “I cannot make any comment on any other investigation that may or may not be going on. At any one time, the commission has several hundreds of antitrust investigations going on, of which only a small proportion are in the public domain.”

The commission said Tuesday that the raids were a preliminary step in investigations into suspected cartels and it does not mean the companies raided are guilty of anti-competitive behavior.

Justice Department spokeswoman Gina Talamona confirmed Tuesday that U.S. investigators were working with the EU and other foreign authorities in the probe but declined to provide any details of the investigation.

Atlanta-based shipping giant UPS Inc. has been “informally contacted” by the Justice Department regarding the probe, company spokesman Norm Black said.

“UPS understands it is not part of the probe,” Black said. “As is its practice, UPS will cooperate with requests from government agencies.”

The largest U.S. airline, AMR Corp.’s American Airlines, said it has received a subpoena from the Justice Department but has not been told it was a target of the investigation, spokesman Tim Wagner said. “And unlike some other airlines,” he said, American didn’t receive a search warrant. He said the Fort Worth, Texas-based airline would cooperate fully with investigators.

United Airlines had its Frankfurt, Germany, office searched by EU officials, according to Chicago-based United spokesman Jeff Green. He said other air freight carriers in Frankfurt had similar visits. He said he was unaware of any other searches or inquiries involving other United offices or airports.

Meanwhile in Chicago, FBI spokesman Ross Rice confirmed Tuesday that the FBI had searched the Air France-KLM cargo terminal at O’Hare International airport as part of an ongoing investigation. He would not say what the investigation was about.

Among the other airlines that were searched or approached by investigators are Atlas Air Worldwide Holding Inc.’s Polar Air Cargo unit, Japan Airlines Corp., Hong Kong’s Cathay Pacific Airways Ltd., British Airways PLC, Germany’s Lufthansa AG, Luxembourg’s Cargolux Airlines and Lan Chile.

Most said they were cooperating with the probe.

In South Korea, the nation’s antitrust watchdog said Wednesday it had inspected local and foreign airlines in cooperation with similar actions by authorities in the United States and Europe. The commission did not mention what airlines were inspected.

But Korean Air Co. spokesman Cho Hyong-chol confirmed that officials visited that airline, adding that he had no details.