Six international freight forwarders have agreed to plead guilty and to pay fines totalling $50.27 million for their roles in conspiracies to fix a variety of fees and charges in connection with the provision of freight forwarding services for international air cargo shipments, the US Department of Justice has announced.
Under the plea agreements, which are subject to court approval, the companies have agreed to pay the following fines:
EGL Inc (now part of Ceva): $4,486,120
Kühne + Nagel International AG: $9,865,044
Geologistics International Management (Bermuda) Ltd: $687,960
Panalpina World Transport (Holding) Ltd: $11,947,845
Schenker AG: $3,535,514
BAX Global Inc: $19,745,927
It was alleged that the companies had engaged in one or more separate conspiracies to impose certain charges or fees on customers purchasing international freight forwarding services for cargo freight destined for air shipment to the United States during various periods between 2002 and 2007.
Christine Varney, assistant attorney general in charge of the Department of Justice’s Antitrust Division, said: “The department’s investigation uncovered six different conspiracies harming businesses and consumers in the United States and across the globe. Our investigation continues in this important industry.”
The six alleged conspiracies are:
* A global conspiracy that took place from March 2003 to October 2007, to impose an Air Automated Manifest System (AAMS) fee on international air shipments of cargo to the United States, in which EGL, Geologistics and Panalpina and others participated;
* A conspiracy that took place from July 2004 to October 2007, to impose an AAMS fee on shipments from Germany to the United States, in which K+N, Schenker and others participated;
* A conspiracy that took place from March 2004 to October 2007, to impose an AAMS fee on shipments from Switzerland to the United States, in which K+N and others participated;
* A conspiracy that took place from October 2002 to October 2007, to impose a New Export System (NES) fee on international air shipments from the United Kingdom to the United States, in which EGL, K+N, BAX and others participated;
* A conspiracy that took place from July 2005 to June 2006, to impose a Currency Adjustment Factor (CAF) on international air shipments from China to the United States, in which K+N, Panalpina, Schenker, BAX and others participated; and
* A conspiracy that took place from August 2005 to December 2007, to impose a Peak Season Surcharge (PSS) on shipments from Hong Kong to the United States, in which K+N, Panalpina, Schenker, BAX and others participated.
Each company is charged with price fixing in violation of the Sherman Act, which carries a maximum fine of $100 million per offence for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Administrative proceedings related to such conduct are still ongoing in the European Union, in Switzerland and New Zealand. In Brazil authorities announced preliminary investigations against the freight forwarding industry in mid August 2010. Respective cases in Canada and Australia have been dropped.
Karl Gernandt, executive vice chairman of the board of Kuehne + Nagel
International AG, said: “Kuehne + Nagel takes its obligation and commitment to abide by all laws including the anti-trust laws very seriously. Kuehne + Nagel has reviewed and reinforced its anti-trust compliance programme, to always ensure compliance with the highest available standards.”
Ceva chief executive officer John Pattullo said: “Reaching this resolution with the United States Department of Justice and putting this aspect of the investigations behind us is an important step. We believe that this agreement is in the Company’s best interests. Ceva takes its legal obligations extremely seriously, and Ceva’s board and management are firmly committed to promoting a culture of compliance with all applicable laws and regulations across its global business.”
Panalpina said: “It is Panalpina’s position, which is supported by economic evidence, that the infringements likely did not affect prices paid by Panalpina’s customers. Notably, the conduct at issue in the DOJ settlement ended in 2007. Since that time, Panalpina has worked to build a state-of-the-art compliance structure aimed at ensuring rigorous adherence to competition and other laws throughout the world.”