Class action lawsuits were filed after several businesses (e.g. Fleurchem Inc.) noticed similar surcharge rates by airlines rather than competitive rates they were used to that secured their business in the past.
This spells illegal price fixing in the air cargo business. Some airlines received subpoenas from the Justice Department (for example, American Airlines) while others received search warrants. Investigators confiscated computers in some cases while other airlines simply supplied requested information without having their facilities searched. Although the investigations have mainly targeted European airlines, some US and Asian carriers are under suspicion of anti-competitive behaviour; in these cases, illegal fixing of rates and surcharges.
On October 17, 2005 Lufthansa Cargo increased its surcharge per kilo to 0.55 euros from 0.50 euros, while ten days later, Cargolux charged 0.60 euros. Coincidentally, on November 21, both carriers reduced the surcharge to 0.55 euros from 0.60 - on the same day.
Monthly jet fuel prices are published by the [US Department of Energy] and based on the U.S. National Average Fuel Index.
The indexed surcharge calculation is linked to the monthly rounded average of the U.S. Gulf Coast (USGC) price for a gallon of kerosene-type jet fuel. The U.S. National Average Fuel Index is published each Monday morning by the Energy Information Administration of the United States Department of Energy.
While many carriers have stated they will cap fuel surcharges at 20 percent, some airlines, such as Virgin Blue, recently announced it will not be increasing its fuel surcharge across the board, despite rising fuel prices.
Business competitors selling the same product informally agree upon that product's pricing. This practice is usually done to increase the price of the product as high as the marketplace will allow, thus generating windfall profits for the sellers.
In the US and Canada, price-fixing can be prosecuted as a felony.
Price Gouging is often the result of price fixing. The buyer thinks the price is too high and unfair under the circumstances. It can refer to prices that are inconsistent with a competitive free market or to windfall profits.
Antitrust laws strive to promote good economic and business practices and competition by prohibiting anti-competitive behaviour and unfair business practices. Competition regulators in government agencies regulate antitrust laws and may also regulate laws that deal with consumer protection. The European Union (EU) has its own competition law which controls collusion and other anti-competitive business practices.
Class action lawsuits
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Fleurchem Inc. filed a class action lawsuit against nine carriers alleging price fixing and violating antitrust laws. A second lawsuit alleges Lufthansa airlines shared information about future increases in fuel surcharges via its air cargo fuel index, [Niagara Frontier Distribution].
Airlines named in class action lawsuits: American Airlines, United Airlines, British Airways, Lufthansa, Japan Airlines, Air France-KLM, Asiana Airlines, Cathay Pacific Airways, Singapore Airlines, Korean Air, Scandinavian airline SAS and Chile's LAN Airlines.
Also named in one lawsuit are air cargo service providers Atlas Air Worldwide and its Polar Air Cargo unit, Nippon Cargo Airlines and Cargolux