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3 foreign airlines plead guilty to price fixing

world Updated: Jan 23, 2009 00:46 IST

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Three foreign airlines pleaded guilty to price fixing on air cargo shipments and agreed to pay a total of $124.7 million in fines, the Department of Justice said Thursday. Under the plea agreements, Chilean company LAN Cargo SA and Aerolinhas Brasileiras SA, a Brazilian company substantially owned by LAN Cargo, agreed to pay a single criminal fine of $109 million. Israel's El Al Israel Airlines Ltd. agreed to pay a fine of $15.7 million.

The airlines are charged with conspiring to eliminate competition by fixing cargo rates charged to customers for international air shipments, including those to and from the U.S.

"American consumers were forced to pay higher prices on the goods they buy every day as a result of the inflated and collusive shipping rates charged by these companies," Scott D. Hammond, Acting Assistant Attorney General in charge of the Department's Antitrust Division, said in a statement.

The Justice Department said the price-fixing occurred between 2003 and 2006.

A total of 12 airlines and three executives have pleaded guilty or agreed to plead guilty in the Justice Department's ongoing investigation into price fixing in the air cargo industry. So far more than $1 billion in criminal fines have been imposed and executives have been sentenced to serve a total of 20 months in jail.

The nine other airlines that pleaded guilty include British Airways PLC, Korean Air Lines Ltd., Qantas Airways Ltd., Air France, KLM Royal Dutch Airlines, Cathay Pacific Airways Ltd., Japan Airlines International Co., Martinair Holland NV and SAS Cargo Group A/S.

In July 2008, Bruce McCaffrey, Qantas' former highest-ranking executive in the U.S., pleaded guilty and was sentenced to serve six months in jail and pay a $20,000 criminal fine for fixing cargo rates on international air shipments. In August, Timothy Pfeil, who was the top U.S. cargo executive for SAS, pleaded guilty to conspiring to fix air cargo rates. He received a six-month jail sentence.

Keith Packer, former commercial general manager for British Airways World Cargo, pleaded guilty in September to his part in a conspiracy to fix rates for international air cargo shipments. He received an eight-month jail term and a $20,000 fine.