Air-cargo claimants say court wrong to cut back scope of damages claim against airlines

22 January 2019 3:49pm

15 January 2019. By Simon Zekaria.

La Gaitana Farms, a Colombian flower-importer, today told a UK appeal court judge that a lower court was wrong to cut back the scope of its long-running antitrust damages claim against air-cargo cartelists.

La Gaitana, and other companies, are seeking payouts from British Airways and a raft of other airlines over air-freight agreements that they say drove up shipment prices.

Their complaint originates from a 2010 European Commission decision to fine air carriers — including British Airways, Air France-KLM and Air Canada — hundreds of millions of euros for fixing prices for fuel and security surcharges on air freight from December 1999 to February 2006 to and within the European Economic Area.

That fine was cancelled by the EU's General Court on procedural grounds five years later, but in March last year, the EU regulator adopted a cartel decision that it said corrected faults highlighted by the court. The new decision laid down fines for 11 airlines of nearly 800 million euros ($913 million). British Airways was fined over 100 million euros in the original decision, which was left unchanged the second time around.

Late in 2017, High Court Judge Vivien Rose curtailed the scope of the claimaints' lawsuits. She ruled that the plaintiffs couldn’t claim coordination of charges for air-freight services on routes between the EU and third countries before May 1, 2004, or for air-freight services on routes between European Economic Area countries — which aren't EU members — and third countries before May 19, 2005.

Such a question about the temporal scope, or maximum permissible age, of the claim based on applicable laws is a central point raised in the suit. The claimants won the right to appeal Rose’s ruling.

Multiple claims in the UK were settled before the hearing, but some remain. There is also litigation against the airlines in the Netherlands, with a ruling expected next month.

'Not restricted'

The claimants argue their position on the basis of a patchwork of powers set down in prevailing domestic laws, EU laws, bilateral agreements between airlines and legislation affecting the air-freight sector. They also say the conduct of the airlines can be deemed retroactively unlawful based on legislation that came into force subsequent to the period of the claims.

Addressing a three-judge Court of Appeal panel headed by Terence Etherton, Fergus Randolph, for La Gaitana, said the commission’s decision didn’t limit finding “hardcore cartel conduct” of the airlines to after 2004. “This is a finding that is not restricted,” said Randolph, referring to the purchase of air-freight services from 2001. “There is no distinction drawn in the decision as to difference of behavior between 2001 and 2004 and from 2004.”

“There is no possibility of exemption,” said Randolph, adding that the airlines committed a “single and continuous infringement.”

Philip Moser, for Emerald Supplies, another company claiming against the airlines, said the commission didn’t have the power to penalize the airlines in relation to conduct before May 2004, as he argued that there should be redress for the claimants. “There was no point in the commission picking that fight.”

'No room for debate'

Rose also didn't feel the need to refer these matters to the EU courts, even as they comprise technical questions over the relationship between EU laws and the powers of national authorities and national courts.

Jon Turner, for British Airways, said there are no grounds to extend the claim. “We are dealing with an issue of lack of jurisdiction,” said Turner, saying Rose's decision was sound.

Turner also said the argument that the conduct of the airlines can be deemed retroactively unlawful is “clearly misconceived.”

Daniel Beard, for other airlines defending the claims, said Rose was “right to cut through all the noise.” “There is no room for debate here,” said Beard, adding that the progression of laws in the sector doesn’t allow for a widening of the scope of the claim for the purposes of competition law. “History of air transport is complicated. It cannot simply be carried across to the international sphere,” he said.

The commission said its 2010 decision was annulled due to a "discrepancy between the reasoning and operative part of the decision." The reasoning part of the decision described the infringement as a 'single and continuous infringement' covering all airlines. However, some articles of the operative part suggested that there were four separate infringements with only some airlines participating in all four, it said. The commission said its 2017 decision brought the operative part in line with the reasoning part.

“It is only the operative part of the decision that is binding,” said Beard, adding that the phrase ‘single and continuous infringement’ is a “term of art.”

Ruling

The Court of Appeal  will deliver a ruling at a later date.

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