Garuda, AirNZ face fines over freight cartel.

Garuda Indonesia and Air New Zealand will be out of pocket after the airlines lost an Australian High Court challenge over involvement in a global air freight cartel.

The scandal involved airlines and competition watchdogs around the world and has resulted in carriers involved paying tens of millions of dollars in fines.

The Australian Competition and Consumer Commission took action against 15 airlines and 13 of them settled and agreed to pay fines totalling $A98.5 million ($US75m). They included Qantas, Singapore Airlines, Cathay Pacific, British Airways, Emirates and Air France-KLM.

But AirNZ and Garuda decided to fight the claim that they breached Australian competition law between 2002 and 2006 by colluding with airlines on charges and surcharges for fuel, security, insurance and customs.

The 2009 accusation involved air freight to ports in Australia from Hong Kong (both airlines), Singapore (AirNZ) and Indonesia (Garuda). The action required the ACC to establish that the conduct occurred in a market in Australia, which the airlines disputed.

Describing the finding as “significant’’, ACCC commissioner Sarah Court said the The High Court unanimously dismissed the appeals by each airline and held that all aspects of the market, including the presence of customers in Australia, need to be considered in deciding whether a market is ‘in Australia’.

“How a market is defined, including considerations of whether conduct occurs in Australia, are critical issues to the understanding and interpretation of Australian competition law,” she said in a statement.

An Australian Federal Court will now decide how much Air NZ and Garuda will have to pay in terms of costs and penalties.

Past fines have ranged from $A20m for Qantas to $A5m for BA.