Photographer: Marlene Awaad/Bloomberg

Air France-KLM to BA Said to Face Renewed EU Antitrust Fines

Updated on
  • EU plans to reimpose penalties thrown out by court in 2015
  • Airlines failed to broker settlement to limit fines, liability

Air France-KLM Group, British Airways and a handful of other carriers may face multimillion-euro antitrust fines from European Union regulators within weeks after attempts to broker a settlement failed, according to people familiar with the case.

EU Competition Commissioner Margrethe Vestager is seeking to re-impose penalties of almost 800 million euros ($844 million) for a cargo cartel that were thrown out on procedural grounds by an EU court in 2015, said the people, who asked not to be named because the process isn’t public. The final amount of the fines could differ slightly from those imposed earlier, they said.

Many of the airlines hoped to reach a settlement to limit follow-on lawsuits from customers and avoid more court fights with the EU, the people said. But other airlines couldn’t agree on a potential accord, and the case could now rumble on for years with likely appeals.

Eleven airlines were fined 790.5 million euros in 2010, with Air France-KLM ordered to pay about 310 million euros and IAG SA’s BA told to pay a 104 million-euro penalty. The European Commission said the companies ran a global scheme affecting cargo services in Europe by coordinating their actions on surcharges for fuel and security without discounts over six years. Deutsche Lufthansa AG wasn’t fined because it informed the EU.

Lufthansa Comment

Lufthansa spokesman Andreas Pauker said the company is aware that the EU plans to issue a new ruling. He said regulators had told the airline that its status as a whistle-blower remains intact and it will continue to be exempt from any fine.

Air Canada will vigorously contest any decision and "maintains that it has, at all times, respected all applicable laws with regard to competition,” said the airline’s spokeswoman Isabelle Arthur.

Air France-KLM, British Airways, SAS AB, Japan Airlines Co., Latam Airlines Group SA, Singapore Airlines Ltd., Cathay Pacific Airways Ltd. and Cargolux Airlines International SA didn’t immediately respond to requests for comment. The commission in Brussels declined to comment.

Air France shares fell 1.7 percent in Paris trading before recovering slightly. IAG shares dropped by 0.56 percent in London trading.

Airlines had so-called state-of-play meetings with regulators by phone last week, two of the people said.

The carriers won the court battle in 2015 when judges criticized "inconsistencies" in the EU decision, cataloging blunders in the way the case was handled. Some of those issues still remain with the decision the EU may readopt, which could see airlines succeed in potential court appeals, one person said.

Vestager, often accused of unfairly singling out U.S. firms in her probes, is keen to highlight the penalties for mainly European airlines before a visit to Washington later this month, the people said.

— With assistance by Frederic Tomesco, Brendan Case, and Richard Weiss

(Updates with company comment and shares from fifth paragraph.)
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