K+N cartel prosecution to go ahead
October 19, 2011
The New Zealand Commerce Commission has been given the go ahead to prosecute Kuehne + Nagel (KN), the last remaining defendant in an ongoing freight forwarding cartel case.
KN is the last defendant of six international freight forwarding companies involved in the case, the commission said.
The other five defendants, Bax Global, Schenker, Panalpina, EGL and Geologistics (Bermuda), have settled with the commission, with the High Court ordering penalties of NZ$8.85 million (US$7m).
The case was brought by the commission last year, alleging collusion on surcharges to cover the costs of complying with security measures.
Breaches of competition law by the forwarders involved three surcharges; the UK NES; Chinese CAF; and Air AMS.
Forwarders would charge an AMS fee to customers for the additional work of complying with US Customs and Border Patrol. The UK NES surcharge relates to new security measures at airports for exports from the UK introduced in 2002. The Chinese CAF surcharge imposes a “currency adjustment fee” supposedly to offset the revaluation of the Chinese currency after the People’s Bank of China stopped pegging the local currency to the US dollar in 2005.
Switzerland-based KN is alleged to have made cartel agreements with competing freight forwarders in New Zealand.
The company had challenged the commission’s jurisdiction on the basis that it was a holding company without involvement in operation or management of the freight forwarding business.
The High Court found the commission had established good arguable grounds that implementation of the alleged agreements, through its direction of, or with the consent or agreement of, companies within its corporate group.
New Zealand’s Commerce Commission general manager of competition Kate Morrison said the decision confirmed the commission’s view of the practical reality in the case.
“It is important that the commission is able to pursue parties in New Zealand courts for anti-competitive conduct we allege they have implemented through their regional and local networks.”
Freight forwarding was a complex industry, the commission added, and referred to all facets of the arrangements for the movement of goods by air.
