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Price-Fixing Under Scrutiny In Air Transport Industry

The concept of honor among thieves is integral to any form of organized crime. If just one member breaks the code, the entire enterprise is jeopardized. Of course, criminals being criminals, any ethical sine qua non is not exactly playing to a long suit.

In the corporate sphere, price-fixing is the apex of criminal collusion--an unambiguous, egregious offense, and one that requires all participants to keep mum. Because cartel behavior has the power to undermine the integrity of entire markets, the penalties are massive: fines that run into the billions and years in jail for executives.

Dawn Raid

According to the Justice Department, in early 2000, various air carriers began colluding on the price of fuel surcharges. Over time, the conspiracy grew, both in the number of participants and the scope of the price fixing.

Amnesty Plus

The DOJ's dramatic success in the continuing investigation owes largely to the Antitrust Criminal Penalty Enhancement and Reform Act (ACPERA), a 2004 law that provides amnesty from criminal prosecution of a company and its employees to the first company to turn itself in and tattle on the rest of the cartel. ACPERA has proved such an effective tool that President Obama signed an extension in June that keeps the law on the books through 2020. Dozens of other countries have followed suit as well, enacting similar laws that turn the table on cartels. The concept is remarkably simple.

Stiff Punishment

All forms of antitrust criminal penalties have trended upward during the past decade. In 2000, the total amount of criminal fines assessed by the DOJ was $152 million. That figure topped $1 billion in 2009. Since 2006 the EC has issued EUR1 billion in cartel fines every year, with a spike of more than EUR3 billion in 2007.

Contributing Author

Steven Andersen

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