> Korean Air Lines Co., Ltd. Pleads Guilty in Air Cargo Cartel Case | COMPETITION LAW

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On July 19, 2012 the Competition Bureau announced that Korean Air Lines Co., Ltd. pleaded guilty in the ongoing air cargo cartel case and was fined $5.5 million for its involvement from 2002 to 2006.

The Bureau’s investigation has led to seven convictions to date and fines of approximately $22 million (other airlines that have pleaded guilty in this case to fixing air cargo surcharges for shipments on some routes from Canada include Air France, Martinair, KLM, British Airways and Qantas).

For the Bureau’s earlier announcements in this case see: Air Carriers Plead Guilty to Price-Fixing Conspiracy (the initial round of fines was as follows: Air France – $4 million; KLM – $5 million; and Martinair – $1 million), Fourth Guilty Plea in Air Cargo Price-Fixing Conspiracy (Qantas was fined $155,000) and Cargolux Pleads Guilty in Air Cargo Price-fixing Conspiracy (Cargolux was fined $2.5 million).

The Bureau generally bases fine negotiations on the affected volume of commerce in Canada (see e.g.: Leniency Program – FAQs).  In this respect, the Bureau will often begin with a “proxy” for a cartel party’s volume of commerce in Canada of 20% (i.e., based on the party’s volume of Canadian sales during the cartel period).

Under the Bureau’s Immunity and Leniency Programs a party that fulfills all requirements of the Bureau’s Immunity Program is entitled to full immunity from prosecution, while subsequent applicants may be entitled to 50% (for the “second in”), 35% (for the “third in”) and subsequent lesser reductions in penalties under its Leniency Program (although a critical distinction between the two programs is the latter requires applicants to plead guilty).  Speed is, therefore, of the essence in evaluating whether to apply for immunity or leniency, as both of the Bureau’s programs involve a “race”.

For more about Canada’s conspiracy rules see:

Conspiracy (Cartels)

For more about the Bureau’s Immunity and Leniency Programs see:

Immunity and Leniency Programs

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