Cathay Pacific Airways Ltd. announced that it will pay $65 million to settle an antitrust class action accusing the company of taking part in a conspiracy to manipulate freight shipping prices, bringing the total settlements in the case to $758 million.
The agreement makes Hong Kong-based Cathay Pacific the twentieth defendant to strike a settlement in the sprawling multidistrict litigation, following similar announcements by Korean Air Lines and Singapore Airlines. Once approved by the court, the settlement will allow Cathay Pacific to exit the long-running suit over the airliners’ alleged price-fixing of freight shipping rates.
In late January, Korean Air Lines and Singapore Airlines won preliminary approval for their $115 million and $92.4 million settlements, allowing the air-freight providers to exit the suit.
Eight defendant groups remain in the case. The 20 settling defendant groups have come to agreements with plaintiffs totaling $758 million. Of that, $485.5 million worth of settlements have been granted final approval by the court.
The origins of this case stretch back to 2006, when consumers brought more than 90 lawsuits against more than two dozen airlines after the U.S. Department of Justice and the European Commission initiated investigations into the air freight industry. According to the DOJ, the conspirators took part in meetings, conversations and other communications to determine the rates the airlines should charge for various routes. The airlines and former executives then imposed the agreed-upon rates and participated in subsequent meetings in the U.S. and other countries to enforce the price-fixing plots, the government alleged.
Cases brought by consumers were aimed at representing anyone who had purchased air-freight shipping services from air cargo companies in two dozen countries, and were later consolidated into multidistrict litigation in New York.
Although both direct and indirect purchasers had initially brought suits, the Second Circuit upheld the dismissal of indirect purchaser plaintiffs in 2012, saying that federal aviation law preempted price-fixing claims brought against foreign carriers under state antitrust statutes. As such, the Cathay Pacific settlement is solely on behalf of direct purchasers.
In 2008, the DOJ levied a $60 million criminal fine against Cathay Pacific after the company pled guilty to violating the Sherman Act. The DOJ’s criminal probe has led to indictments for 22 airlines and 21 airline executives, securing $1.8 billion in criminal fines.
The case is In re: Air Cargo Shipping Services Antitrust Litigation, case number 1:06-md-01775, in the U.S. District Court for the Eastern District of New York.