Wednesday, September 9, 2009

European Commission Cracks Down on Cartels

The Telegraph is reporting that a number of major airlines, including British Airways, Air France-KLM, and Qantas, are facing more than £1bn in fines and compensation claims for price-fixing on both cargo and passenger flights.  See Helia Ebrahimi, Airlines Face Fines After EU Ruling on Price-Fixing, Telegraph (London), Sept. 5, 2009 (available here).

According to the story the ruling will be accompanied by a new directive from the European Commission which will help facilitate potential victims of price-fixing cartels coming together in "class action" type litigation.  The heavy-handed enforcement and new legislation is intended to correct the perceived problem that the penalities for cartel behavior don't outweigh the benefit.  As the story notes, many airlines build price-fixing fines into their annual budgets while allegedly reaping whirlwind profits from the behavior.

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