Air freight cartel gets nearly $12m penalty

Latest charge to Kuehne + Nagel brings total penalties in this case to $11.95 mil.

air freight cartel

The High Court in Auckland has ordered Kuehne + Nagel (K + N) to pay a penalty of $3.1 million plus costs for breaches of the Commerce Act. K + N’s penalty brings the total penalties ordered in this case to $11.95 million.

K+ N is the last defendant in a long-standing case brought by the Commerce Commission against six international freight forwarding companies for a range of “hard core” cartel behaviour. The other five defendants admitted their role in the cartel and paid penalties in 2010 and 2011. K + N challenged the Commission’s jurisdiction but were unsuccessful in both the High Court and Court of Appeal.

K + N admitted at the hearing to being part of a secret cartel that called itself the ‘Gardening Club’. The Gardening Club agreed to charge surcharges on air freight forwarding services from the UK to countries including New Zealand, ostensibly to cover the costs of increased security measures imposed in the UK. The cartel participants reportedly agreed that they would each pass on certain costs to customers, rather than compete in the usual way and determine their own pricing structures and price levels.