WELLINGTON, April 8 -- A Swiss air freight company was ordered Tuesday to pay a penalty of 3.1 million NZ dollars (2.68 million U.S. dollars) for being part of an international cartel that fixed freight prices into New Zealand, the country's competition watchdog said Tuesday.
The High Court in Auckland ordered Swiss company Kuehne + Nagel International AG to pay the penalty plus costs for breaches of the Commerce Act, said the Commerce Commission.
It was the last of six international airlines taken to court and the penalty brought the total penalties in the case to 11.95 million NZ dollars imposed "for a range of hard core cartel behavior," said a statement from the commission.
The other five companies admitted their role in the cartel and paid penalties in 2010 and 2011, but Kuehne + Nagel unsuccessfully challenged the commission's jurisdiction.
Kuehne + Nagel admitted to being part of a secret cartel that called itself the "Gardening Club" and agreed to charge surcharges on air freight forwarding services from the United Kingdom to countries including New Zealand, ostensibly to cover the costs of increased security measures imposed in the UK.
The cartel participants agreed that they would each pass on certain costs to customers, rather than compete in the usual way and determine their own pricing structures and price levels.
"The Gardening Club was a classic hard-core cartel. Members attended covert, off-site meetings outside of business hours and used code words to describe the agreed surcharges," commission chairman Dr. Mark Berry said in the statement.
"Our investigation uncovered emails in which Gardening Club members referred to the agreed surcharges as 'the new price for asparagus for the forthcoming season' and 'the price of marrows'," he said.
"When members lacked confidence that cartel members were performing the illegal agreement, they e-mailed in terms like, 'I hear.. concerns about the price of produce from the garden of Velcro, which appears to be operating as a charitable cooperative for the benevolence of vegetable eaters rather than growers'," said Berry.
The commission was pleased with the penalties which would act as a deterrent to other cartel behavior, he said.