European Commission Fines Freight Forwarders for Price Fixing

The European Commission has imposed fines totalling 169 million euros on 14 freight forwarding companies for conspiring to fix the prices of surcharges.

In 2003, soon after the UK introduced electronic declarations for exports, the companies broke the law by conspiring to levy a surcharge for this reporting service, according to the Financial Times. They agreed on a “peak season” surcharge in the run-up to Christmas. The activity continued until 2007.

One of the four cartels involved, known as the “gardening club”, disguised its activities by using code words such as “fresh marrow” and “asparagus”, while the individual members were referred to by such names as “Head Planter”, “Horticulturalist”, and “Gardener”.

The main fines were levied on Kuehne & Nagel, the Swiss logistics group, which was fined €53.7 million, and Panalpina, another Swiss group, which must pay €46.5 million.

Also fined were Deutsche Bahn and its Schenker and Bax units, Ceva, Agility, Yusen Air & SeaKintetsu World Express, Toll Global Forwarding, Hellmann Worldwide Logistics, United Parcel Service (UPS), UTi Worldwide Inc. (UTIW), Expeditors International of Washington, Nippon Express, and DSV.

Deutsche Post, and its subsidiaries DHL and Exel, received immunity from fines after informing regulators about the cartel.

Joaquín Almunia, the European Union’s competition commissioner, said:

The fact that such deliberate organised illegality can still take place today is shocking. We will continue to fight cartels as our number one priority, because they are the most harmful illegal activity breaching our competition rules.

Because the businesses that used freight forwarders to import and export goods are numerous, the negative consequences on the whole economy are very clear. Ultimately the final consumer of the goods transported may also have to pay higher prices.

 (Sources: Financial Times, Bloomberg)

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