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Cartel litigation funder Peter Koutsoukis of Claims Funding International answers some key questions on the upcoming EU air freight cartel decision and what it means for air freight users.
What can people expect from the forthcoming EU air freight cartel decision?
Over the summer, the EU’s Commissioner for Competition, Neelie Kroes will make an announcement that will affect thousands of businesses who fly freight in and out of Europe. Normally, decisions in the EU have little impact on what happens in the Middle East business community, but this one is seismic in its impact and companies across the Arabian peninsula may be affected. Kroes will announce that a number of major airlines operating air freight in and out of the EU will be subject to huge fines for participating in a price-fixing cartel over a period of 7 years between 2000-2007. This announcement opens the way for what will be the largest civil claim for cartel damages ever seen in Europe.
How does that affect the average freight manager, operations director or logistics manager?
The EC decision will bind European Courts on the question of liability. This opens the way for air freight users who have booked air freight spend to the ledgers of their European entities to recover from the airlines the amount of the ‘overcharge’ which is estimated at approximately 10% of the total air freight spend in the cartel period. It is recommended that any company that has spent at least £1m on international air freight booked to their European entities should seriously consider claiming their refund.
What can companies claim?
As the total estimated overcharge was around 10%, 10% of your total air freight spend for the 7 years of the cartel period would be claimed. One airline (Lufthansa) has already settled out of court for its US liability for US$85m. British Airways and Air France have set aside almost £1bn in their financial accounts to cover fines and refund cartel victims.
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How do companies go about applying for compensation?
Claims Funding International is underwriting the European recovery proceedings for this cartel and its parent company, a law firm, is conducting the recovery proceedings involving Australasian routes. The legal model does not require companies to be a party to any litigation, just simply to assign their right to claim to us. If we are successful then we deduct a commission from the amount recovered, if not then there is no payment. It’s a risk free, worry free process.
How much are we talking here?
The estimated detriment to businesses may well exceed €1b. We already have a significant number of companies that are big air freight users who have joined the recovery process. The sectors most affected by the cartel are auto and precision machine parts, flowers and food, precious metals, electronic components and consumer goods, and many companies in these sectors are involved.
How long will it take to recover the refund?
16 airlines have already pleaded guilty to price fixing and some have provisioned money to repay victims as set out above. One airline has settled its US liabilities. There are recovery proceedings instituted in the US, Canada, Australia, the UK and Europe will be added shortly. It seems likely that the airlines will not want to fight on numerous fronts in endless litigation and accordingly we expect them to settle by way of mediation at some stage.
How do companies find out more?
Any company who has spent over £1m in air freight booked to the ledger of its EU entity or who thinks they have a claim against an airline for overcharging should get in touch with us by visiting www.claimsfunding.eu or by emailing us at mail@claimsfunding.eu and we will happily advise them as to next steps.
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FEATURED COMMENT
Significant damages are possible in competition damages case. I brought the first such case in the English courts. We e