Ex-Air France executives charged with fixing cargo prices

Two former Societe Air France cargo executives were charged today with conspiring to fix air-cargo prices, the latest action in a sweeping trans-Atlantic probe into alleged price fixing that may result in prison time for numerous airline cargo executives and as much as $2.1 billion in settlements paid out to air shippers and freight forwarders.

Ex-vice presidents Marc Boudier and Jean Charles Foucault each face one charge of conspiracy to restrain trade in violation of the Sherman Antitrust Act, a crime punishable by as much as 10 years imprisonment and a fine of as much as $1 million, prosecutors said today in a statement. The men were indicted by a federal grand jury in Chicago, the government said.

"Boudier and Foucault carried out a conspiracy by fixing and coordinating rates on air-cargo shipments to certain U.S. locations and elsewhere," from August 2004 to February 2006, the U.S. Justice Department said in a statement.

The indictments stem from lawsuits filed in the United States, Canada, the European Union (EU), and the United Kingdom alleging that from Jan. 1, 2000, to Sept. 11, 2006, dozens of airlines conspired to fix prices of air shipping services by coordinating to inflate the cost of fuel and security surcharges.

The airlines were also accused of jointly agreeing to eliminate or prevent rate discounting practices, and setting appropriate yield targets for the shipments they handled. It is believed that global air shipping charges were inflated by about 10 percent as a result of the conspiracy.

Several regulators, including the Justice Department and the European Commission, have been investigating the issue for years. To date, the United States has imposed $1.6 billion in fines on 18 airlines and filed criminal charges of price fixing against 18 airline executives.

On Nov. 9, the EU fined 11 airlines $1.1 billion for their role in the collusion. The largest fine was meted out to Air France-KLM to the tune of $476 million.

In the United States, civil plaintiffs have begun a price fixing class action against 45 U.S. and foreign airlines. To date, 12 airlines have agreed to settlements totaling about $540 million. With additional settlements expected in the coming months, the total in settlements could exceed $1 billion, according to Class Action Refund LLC, a New York firm seeking to represent air-cargo users that might be eligible for refunds.

Only shippers are eligible to participate in the European settlements. By contrast, direct purchasers of air shipping services, whether they be shippers or freight forwarders, are eligible to share in the U.S. settlements.