Short Reads

Court of Justice dismisses all appeals against cartel decision in the freight forwarding sector

Court of Justice dismisses all appeals against cartel decision in the freight forwarding sector

01.03.2018 EU law

On 1 February 2018, the European Court of Justice dismissed the appeals by several freight forwarders for their participation in various infringements in the sector for international air freight forwarding services.

Freight forwarding services involve a number of services relating to international logistics, such as packaging, transportation, warehousing, handling and customs and fiscal formalities. In 2012, the European Commission fined several freight forwarders for collusion relating to four pricing mechanisms. These pricing mechanisms primarily related to various surcharges charged by freight forwarders to their customers (e.g. the 'Peak Season Surcharge'). In 2016, the General Court largely confirmed the Commission's fining decision, although it lowered the fine for one of the companies in the case [see our March 2016 Newsletter].

On appeal before the Court of Justice, the freight forwarders raised several arguments, all of which were rejected. A selection of these arguments are set out below:

  • Schenker Ltd and Deutsche Bahn AG argued that the Commission had exceeded its discretion by holding them liable for the anticompetitive conduct of their subsidiary (Bax Global UK), while the former parent company of Bax Global UK was not held liable. The Court of Justice ruled that 'the Commission has a discretion concerning the choice of legal entities on which it can impose a penalty for an infringement of EU competition law'. The Commission could not be criticised for not fining all former parent companies, as this would have lengthened the proceedings and added considerably to the work involved.

  • Panalpina World Transport (Holding) Ltd argued that the Commission had erred in calculating the fine. According to Panalpina, the Commission should have taken the value of the surcharges (e.g. the 'Peak Season Surcharge') as a basis for calculating the fine and not the value of the sales on the broader market for international air freight forwarding services. The Court of Justice, however, ruled that the Commission's approach was correct, as the collusion relating to the various surcharge mechanisms was designed to 'to fix the final price of the freight forwarding services'.

  • Kühne + Nagel International AG ("K+N") argued that Regulation No 141, which exempted certain activities in the transport sector from the application of the European competition rules, also applied to the freight forwarding sector. The Court of Justice disagreed and ruled that 'the services provided by freight forwarders, whose activity consists in supplying, in one package, a number of services that are distinct from the transport operation in itself, is not excluded […] by Article 1 of Regulation No 141.' Accordingly, the infringements by K+N did not fall under the (now expired) exemption for fixing 'transport rates and conditions' under Regulation No 141.

This article was published in the Competition Law Newsletter of March 2018. Other articles in this newsletter:

  1. ACM publishes key priorities for 2018 and 2019

  2. ACM publishes position paper on market dominance by tech companies


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