11 May 2017

Commission recovers from turbulence and re-adopts air cargo decision

The Commission recently re-adopted its air cargo cartel decision after the General Court annulled its original decision for inconsistencies on procedural grounds. The Commission fixed the fines at the exact same level for most of the air carriers allegedly involved in the cartel. As a result, there are currently three different “flavours” of the same cartel decision. First, the re-adopted cartel decision. Second, the original 2010 cartel decision, which applies to air carrier Quantas because it did not appeal the original decision to the General Court. Third, a pending appeal by British Airways against the General Court’s partial annulment of the original cartel decision. It remains to be seen how national courts will deal with these different flavours in pending civil damages proceedings.

In November 2010, the European Commission fined a number of air cargo carriers for operating a worldwide price-fixing cartel which affected cargo services within the European Economic Area. All air carriers involved, except Quantas, brought actions before the General Court against the Commission’s decision. According to the air carriers, there were discrepancies between the grounds of the decision, which describe a single and continuous infringement in the EEA and Switzerland, and the operative part of the decision, which refers to four separate infringements relating to different periods and routes.

The General Court agreed with the air carriers that there was a contradiction between the grounds and the operative part of the contested decision. The principle of effective judicial protection requires that the operative part of a Commission decision must be particularly clear and precise. Further, because national courts are bound by a Commission decision – provided it has not been annulled or invalidated – the meaning of the operative part must be unambiguous. It must enable national courts to understand the scope of the infringement and identify the liable individuals, so that they can draw the necessary inferences with regard to claims for damages by cartel victims. The General Court ruled that the inconsistencies could infringe the air carriers’ rights of defence and prevent it from exercising its power of review. It therefore annulled the decision. In relation to British Airways, the General Court only partly annulled the decision, as the carrier had only sought annulment of one particular aspect of the cartel infringement. British Airways’ appeal against this ruling is currently pending at the European Court of Justice.

The Commission has repaired these inconsistencies in its newly adopted decision and re-established the fines, totalling EUR 776 million. In the new decision, fines were fixed at the same level as in the earlier decision for all carriers, except for Martinair. In the 2010 decision, the maximum fine level of 10% of Martinair’s total turnover was set on the basis of its 2009 turnover. Martinair’s turnover was significantly lower in 2016 than in 2009. As a result, Martinair’s fine has been lowered to reflect this.