IATA Price Fixing Primer

Anita Mosner is a lawyer and consultant based in Washington, D.C. practicing in areas of the commercial aviation industry, with experience in handling policy and commercial matters in other modes of transportation.
Recently she assisted an airline client in spinning off its cargo operations into a separate subsidiary, and obtaining full certification for that new carrier.

Dateline Warsaw—At this week’s IATA Cargo Emerging Markets Warsaw (CEM), Anita Mosner underscored the fact that she is both one smart cookie and also well in touch with raising audience attention as she took on the cargo price fixing uproar four square offering some cogent thoughts and advice to CEM conferees about the labyrinth of anti-trust compliance.
     “Reach of the antitrust regulator is long, and statutes carry both civil and criminal penalties.
“Global inquiry into claims of price fixing started on February 14, 2006 reflecting close cooperation between EU competition authorities, U.S. Department of Justice, Canada Competition Bureau, and Asian antitrust authorities
     “Two carriers, BA and Korean, have entered guilty pleas in the United States, and have agreed to pay massive fines. Other pleas are expected to follow.
     “Government inquiries have triggered an avalanche of private treble-damages cases in the United States and have also consolidated into class action suits.
     “There are plenty of ways to tip the balance into price fixing,” Ms. Mosner said.
     “Agreements” can be unspoken, with evidence of agreement.
     “Parties can engage in conscious parallelism by following each other’s behavior, without any words being exchanged.
     “Parties can “signal” each other in any number of ways including competitors using electronic tariffs to express discontent.
     “There is no need for an explicit agreement among the parties in order to support a claim of price fixing.
     “Several factors favor collusion in the cargo business.
     “The fewer the number of sellers, the easier it is for them to get together and agree on prices, bids, customers, or territories.
     “Air cargo competitors know each other well through social connections, trade associations, legitimate business contacts, or shifting employment from one company to another.
     “The more standardized a product is, the easier it is for competing firms to reach agreement on a common price structure.
     “The probability of collusion increases if other products cannot easily be substituted for the product in question.
     “Repetitive purchases may increase the chance of collusion, as the vendors may become familiar with other bidders and future contracts provide the opportunity for competitors to share the work.
     “Air cargo can avoid antitrust risk by exercizing a high level of caution when communicating with competitors.
     “Sharing of commercial information must be very carefully monitored as well any public statements about price.
     “For example claims that specific prices being charged are too low or announcing a future price increase, and then withdrawing it when competitors fail to match will certainly raise regulator’s attention.
     “There is also need to ensure that activities conducted under the auspices of a trade association do not veer into impermissible areas.
     “Above all the best way to avoid charges of price-fixing is to educate staff, and develop an antitrust compliance program.
     “Air cargo should take a proactive approach toward monitoring the regulatory environment.
     “Staying ahead of the curve enables carriers to challenge unworkable requirements before they are set in stone.
anita.mosner@hklaw.com
Geoffrey