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South American company pleads guilty to air cargo price-fixing conspiracy

OTTAWA, August 20, 2013 — The Competition Bureau announced today that LATAM Airlines Group S.A. (LATAM), the parent company of LAN Cargo S.A., pleaded guilty to criminal conspiracy under the Competition Act. LATAM was fined $975,000 by the Ontario Superior Court of Justice for its participation in an air cargo price-fixing cartel.

LATAM’s guilty plea relates to fuel surcharges that it imposed on international air cargo shipments from Canada to South America and elsewhere between March 17, 2003 and February 14, 2006.

The Bureau’s investigation into the fixing of fuel and other surcharges has successfully secured over $25 million dollars in fines to date. LATAM is the ninth party to be convicted in this investigation.

In additional to LATAM’s guilty plea, Air France, KLM, Martinair, Qantas, British Airways, Cargolux, Korean Air, and Cathay Pacific have also pleaded guilty to fixing one or more air cargo surcharges for shipments on certain routes to and from Canada. The Bureau’s investigation into the alleged conduct of other air cargo carriers continues.

Price-fixing conspiracies are, because of their secret nature, very difficult to detect and prove. High or identical prices are not in and of themselves evidence of criminal activity. There must be evidence that competitors have agreed to set those prices. Where there are substantiated allegations of wrongdoing in the marketplace, the Bureau will not hesitate to take action.

The Bureau’s investigation benefitted from cooperation of certain parties under the Bureau's Immunity and Leniency Programs. These programs create incentives for parties to address their criminal liability by cooperating with the Bureau in its ongoing investigation and prosecution of other alleged cartel participants.

Under the current conspiracy provision in the Competition Act, it is a criminal offence for two or more competitors or potential competitors to conspire, agree or arrange to fix prices, allocate customers or markets, or restrict the output of a product. An offence under this provision is punishable by a fine of up to $25 million and/or imprisonment for a term of up to 14 years. In this case, the conduct occurred under the former conspiracy provision, which provides for a fine of up to $10 million and/or imprisonment for a term of up to five years.

To secure a conviction under the former conspiracy provision of the Act, the Bureau is required not only to prove an agreement between competitors to fix prices, but also that the agreement was likely to have an undue economic effect on competition in the market. This significantly increases the complexity of proving a violation of the Act.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

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