American Airlines to Pay $5 Million, Give Evidence in Freight-Cartel Probe

AMR Corp.’s American Airlines agreed to give evidence against other carriers and pay $5 million to a group of freight shippers to settle a New York class-action lawsuit over its role in a global price-fixing cartel.

Under the deal, American will provide witnesses, documents and electronic data to help shippers in similar cases in Canada, Australia, South Korea and other countries, the group’s lawyer, Michael Hausfeld of Hausfeld & Co. LLP, said in a statement in London today. The agreement, filed July 26 in federal court in Brooklyn, New York, is the first by an airline to help prosecute the cartel claims outside the U.S., he said.

“It is an important step forward for shippers in Europe and around the world and demonstrates that companies can act responsibly to resolve competition disputes without resorting to excessive or protracted litigation,” Hausfeld, who is co-lead counsel in the case, said in the statement.

The industry’s freight services have been probed by the U.S. and the European Union since 2006, leading to settlements, fines and plea deals by airlines and executives. Earlier this month, Air France-KLM Group agreed to pay $87 million to hundreds of freight shippers to settle a similar class-action lawsuit in the U.S.

American, based in Fort Worth, Texas, didn’t admit fault or liability and was only added as a defendant in the case in order to seek court approval of the proposed deal, spokesman Tim Wagner said today in an e-mail.

“American Airlines has done nothing wrong,” Wagner said. “Litigation is an expensive and uncertain proposition and avoiding the cost and inconvenience of trial made paying the settlement the best financial decision for American.”

Settlement talks with American started after the EU in 2007 gave the carrier a so-called statement of objections related to the cartel, Hausfeld said in court papers.

Hausfeld later concluded that “while AA did face some risk of liability, it would be difficult for plaintiffs to obtain a judgment against it, given the evidence,” according to the court filing.

The case is In re Air Cargo Shipping Services Antitrust Litigation, 1:06-md-01775, Eastern District of New York (Brooklyn).

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net.

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