Around the globe, logistics providers continue to be dogged by probes into alleged violations of competition legislation, facing fines of millions of dollars. Vessel sharing agreements could be the latest battleground in Asia, as the newly formed Hong Kong Competition Commission is set to scrutinize their legality.

For a number of airlines, it looked as though Santa Claus was bringing them release from a long legal battle in Europe. In mid-December, the General Court of the European Union decided to annul antitrust fines totalling €790 million (US$870 million) that had been imposed on 11 carriers. This overturned a ruling from 2010 that found these airlines to have operated a “single and continuous infringement” of competition rules, coordinating their behaviour in setting prices. The latest round at the General Court found contradictions in the earlier verdict and scrapped the fines.

Those airlines may have felt cause for an early Christmas celebration, but this mood was certainly not shared by express operators. Around the same time as the airline verdict was pronounced the competition authority of France ordered 20 parcel carriers to pay altogether €672.3 million (US$691 million) for price-fixing.

The list of express firms charged includes the French arms of FedEx, DHL and TNT as well as Geodis, Schenker and Norbert Dentressangle and French Postal agency subsidiaries Chronopost and DPD France. Their alleged infractions occurred between September 2004 and September 2010. Geodis, the logistics arm of France’s state-owned rail company SNCF, was hit by the biggest penalty of €196 million (US$216 million).

In the US, the fall-out from anti-competition probes entered 2016 with an agreement by DHL to pay a group of shippers US$53 million to settle a class action lawsuit over price-fixing allegations. The case had been launched back in 2008 by 11 shippers who claimed that a number of forwarders and airlines had conspired to fix prices and inflate rates and surcharges. In recent years some 21 logistics companies, including many of the largest multinational operators, have settled, and so have many airlines.

One of the last airlines to settle was Polar Air Cargo (and parent Atlas Air), which agreed to pay US$100 million in three instalments over three years. The US outfit made the announcement three days after the DHL settlement decision.

The class action lawsuit against airlines charging antitrust violations between 2000 and 2006 has so far brought more than US$1.1 billion in settlements.

The case continues against three remaining defendants: Air China, Air India, and Air New Zealand.

Legal battles are also continuing in India, where the cargo divisions of Jet Airways, IndiGo and SpiceJet were fined in November for fixing fuel surcharges. Jet was fined US$22.9 million, Indigo US$9.6 million and SpiceJet US$6.4 million after an investigation by the Competition Commission of India.

The authority was investigating a complaint launched in 2013 by the Express Industry Council of India, and it came to the conclusion that “the airlines acted in parallel in collusion in fixing fuel surcharge rates,” resulting in “indirectly determining the rates of air cargo transport.”

All three airlines have declared that they are contesting the fines.

Now ocean carriers are concerned that they could find themselves on the wrong side of competition rules in Hong Kong, as the recently created Hong Kong Competition Commission is about to examine the case of vessel sharing agreements. The territory’s new competition law makes no allowance for vessel sharing agreements, as shipping executives and terminal operators have pointed out repeatedly, warning that this could lead to an exodus of traffic to Shenzhen.

In December the Hong Kong Liner Shipping Association submitted a block-exemption request to the Competition Commission, arguing that vessel sharing agreements were integral to Hong Kong’s status in the shipping world. The association pointed to Singapore’s Competition Commission, which decided to grant carriers exemption from its laws until 2020.

By Ian Putzger

Air Freight Correspondent | Toronto