Garuda Indonesia B777-300 PK-GIA - Photo : Alberto Cucini/Airways

MIAMI – Garuda Indonesia (GA) has finally decided to drop its appeal against the sentence imposing on the carrier a fine of US$14.7m (AU$19m) for participating in a cartel agreement along with 14 other airlines.

It all started between 2003 and 2006 when a group of 15 global airlines, comprising GA, Air New Zealand (NZ), Qantas (QF), Singapore Airlines (SQ), and Cathay Pacific (CX) entered into a cartel agreement on freight fees and surcharges applied to a large range of consumer goods.

Out of the 15 airlines involved in the cartel agreement, 13 accepted to pay the fine imposed by the Australian Competition & Consumer Commission (ACCC) while two carrier, GA and NZ, opted for a court action against the penalty which came to a conclusion in 2013.

The Court firstly dismissed the case in favor of GA and NZ but subsequently changed its mind and sentenced the two airlines. The case was again brought to the Australian High Court by GA where the appeal was dismissed and, in May 2019, a Federal Court issued an order confirming the penalty. One month later GA appealed again against the sentence, an appeal that now stands withdrawn.

"Garuda has been ordered to pay the full penalty for its role in this serious price-fixing cartel without a further appeal." Rod Sims, ACCC Chair Click To Tweet
Air New Zealand B777-300 ZK-DKN – Photo : Luca Flores/Airways

Fine Paid in Installments but With Warning

Garuda will now pay the fine plus a contribution to ACCC costs but was allowed to do so by monthly installments beginning December 2021 to December 2026.

The installment payments were motivated by the ACCC Chair, Rod Sims, which declared that “The airline industry has suffered significantly because of the pandemic and these orders take account of that. What is important is that Garuda has been ordered to pay the full penalty for its role in this serious price-fixing cartel without a further appeal.”

GA has to ensure an on-time monthly payment to avoid being compelled to pay the penalty in its totality within “30 working days.” ACCC expressed satisfaction with the conclusion of the case against the 15 global airlines with a total recovered amount in penalties of US$102.5m (AU$132.5m).

Rod Sims, also warned that “Businesses of all sizes should note the ACCC’s determination to fight this large international cartel. Significant penalties, like the US$19m one ordered against Garuda, send a strong warning that anti-competitive conduct has serious consequences.”