Cathay Pacific Pleads Guilty to Price-fixing Conspiracy
OTTAWA, ONTARIO -- (Marketwired) -- 06/20/13 -- The Competition
Bureau announced that Cathay Pacific Airways Limited (Cathay Pacific)
pleaded guilty today to criminal conspiracy under the Competition Act
and was fined $1.5 million by the Ontario Superior Court of Justice
for its participation in an air cargo price-fixing cartel.
Cathay Pacific's guilty plea relates to navigation surcharges that it
imposed on international air cargo shipments to and from Canada
between April 13, 1999 and August 14, 2003.
"When the Bureau obtains evidence of wrongdoing, it does not hesitate
to pursue those who engage in price-fixing agreements that harm
Canadian businesses and consumers," said John Pecman, Commissioner of
Competition. "These types of agreements represent one of the most
egregious forms of anti-competitive behaviour."
Price-fixing conspiracies are, because of their secretive nature,
very difficult to detect and prove. High or identical prices are not
in and of themselves evidence of criminal activity. There must be
evidence that competitors have agreed to set those prices. When there
are substantiated allegations of wrongdoing in the marketplace, the
Bureau will not hesitate to take action.
To date, the Bureau's air cargo surcharges investigation has resulted
in eight criminal convictions and fines of over $24 million.
Cargolux, Air France, KLM, Martinair, Qantas, British Airways, and
Korean Air have also pleaded guilty to fixing one or more air cargo
surcharges, including fuel surcharges, for shipments on certain
routes from Canada. The Bureau's investigation into the alleged
conduct of other air cargo carriers continues.
The Bureau's investigation benefitted from cooperation of companies
under the Bureau's Immunity and Leniency Programs. These programs
create incentives for parties to address their criminal liability by
cooperating with the Bureau in its ongoing investigation and
prosecution of other alleged cartel participants.
Under the current conspiracy provision in the Competition Act, it is
a criminal offence for two or more competitors or potential
competitors to conspire, agree or arrange to fix prices, allocate
customers or markets, or restrict the output of a product. An offence
under this provision i
s punishable by a fine of up to $25 million
and/or imprisonment for a term of up to 14 years. In this case, the
conduct occurred under the former conspiracy provision, which
provides for a fine of up to $10 million and/or imprisonment for a
term of up to five years.
To secure a conviction under the former conspiracy provision of the
Act, the Bureau is required not only to prove an agreement between
competitors to fix prices, but also that the agreement was likely to
have an undue economic effect on competition in the market. This
significantly increases the complexity of proving a violation of the
The Competition Bureau, as an independent law enforcement agency,
ensures that Canadian businesses and consumers prosper in a
competitive and innovative marketplace.
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