Kuehne & Nagel Fined With Panalpina for EU Freight Cartels
Stock Chart for Panalpina Welttransport Holding AG (PWTN)
Kuehne & Nagel International AG (KNIN) and Panalpina World Transport Holding Ltd. (PWTN) were among companies fined 169 million euros ($225.6 million) by European Union regulators for price fixing of freight-forwarding surcharges.
Kuehne & Nagel units were fined 53.7 million euros and Panalpina 46.5 million euros, the European Commission said today. United Parcel Service Inc. (UPS), Apollo Management LP’s Ceva Group Plc, UTi Worldwide Inc. (UTIW), Expeditors International of Washington Inc., Nippon Express Co. (9062), Agility (AGLTY) and DSV A/S (DSV) were also punished by the EU for operating four separate cartels from 2002 to 2007, the Brussels-based agency said.
“Because the businesses that used freight forwarders to import and export goods are numerous, the negative consequences on the whole economy are very clear,” EU Competition Commissioner Joaquin Almunia told reporters. “Ultimately the final consumer of the goods transported may also have to pay higher prices.”
Freight forwarders fixed prices for fees charged on goods sent on important trade routes between the EU and the U.S. and Asia, according to Almunia. They agreed on a “peak season” surcharge in the run-up to Christmas, he said. Other fees covered export charges introduced by the U.K. and the U.S. and extra costs when Chinese currency appreciated against the U.S. dollar in 2005.
Almunia said the companies were “fully aware” of their illegal actions and tried to conceal them by describing their contacts as a “gardening club.” They used code names based on vegetables such as asparagus and baby courgettes. They also used a Yahoo! Inc. e-mail account to discuss rates, the EU said.
Deutsche Post AG, based in Bonn, and its subsidiaries DHL and Exel received immunity from fines after informing regulators about the cartel, according to the company and the EU.
Deutsche Bahn AG and its Schenker and Bax units, Ceva, Agility and Japan’s Yusen Air & Sea Service Co. received fine reductions for cooperating with regulators. Units of Kintetsu World Express Inc. (9375), Toll Global Forwarding Ltd. and Hellmann Worldwide Logistics also were fined.
Freight forwarding involves organizing the transportation of goods along with related activities such as customs clearance, warehousing and ground services.
‘Incorrect’ Legal Conclusions
Kuehne & Nagel said it would consider appealing the fine to the EU courts because regulators hadn’t “correctly investigated the facts” and drew “significantly incorrect factual and legal conclusions,” according to a statement from company Chairman Karl Gernandt.
Panalpina “has so far made no provision for the penalty of 46.5 million euros as it was not in a position to predict the outcome of this proceeding,” the Basel, Switzerland-based company said in an e-mailed statement. The infringements “likely did not affect prices paid by Panalpina’s customers.”
UPS “has concerns about the decision in this inquiry which dates back to 2007,” Peggy Gardner, a spokeswoman for the company in Atlanta, said in an e-mailed statement. “We will decide on next steps, including a possible appeal.”
DSV, based in Copenhagen, plans to seek reimbursement of its 379,000 euro-fine from the former owners of the French unit that was targeted, it said in a statement. DSV took over the unit when it bought ABX Logistics Worldwide SA from 3i Group Plc (III) and partners in 2008. Legal expenses exceeded the fine, said Jens Lund, DSV’s chief financial officer, in a telephone interview.
Deutsche Bahn will study the EU’s decision before deciding on any appeal, said Bernd Weiler, a spokesman based in Berlin. The company has implemented compliance programs since the actions took place more than five years ago, he said.
UTi “believes that neither it nor its subsidiaries violated European competition rules” and is evaluating a possible appeal of its 3 million-euro fine to the EU courts, Jeff Misakian, UTi’s global vice-president for investor relations, said in an e-mailed statement.
Agility will “carefully consider” the EU’s decision to fine two of its units a combined 4.96 million euros, Sara Grindler, a spokeswoman for the company, said in an e-mail. The Kuwait-based transport company “cooperated fully” with the EU probe and “attaches great importance to ensuring full compliance” with antitrust rules.
Ceva didn’t respond to a calls and an e-mail seeking comment. Nippon Express, Hellmann, Toll and Kintetsu didn’t immediately respond to e-mails seeking comment.
Regulators in 2010 sent formal antitrust complaints to about 47 companies and affiliates across Europe, the U.S. and Asia over alleged price fixing in freight forwarding. The probe began in October 2007 when the commission raided the offices of Kuehne & Nagel and Panalpina.
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