Private Air Cargo MDL Settlements Top $1 Billion

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Private settlements in the large air cargo antitrust MDL recently reached a combined total of $1 billion after EVA Airways recently reached a $99 million deal.

Monday, May 4, 2015 - The private damages awarded to plaintiffs in multidistrict litigation involving a price-fixing scheme perpetrated by airline companies have reached over $1 billion. A recent settlement reached with EVA Airways for $99 million pushed the total past 10 figures recovered thus far by victims of the antitrust activities by a large number of companies.

27 airline companies have settled to date, leaving only Air China, Air India, Air New Zealand, Atlas Air Worldwide Holdings and Polar Air Cargo left to make a deal with plaintiffs to end the MDL. Of the 24 settlements already agreed to, the EVA deal stands as the 10th to total over $50 million and the 4th to reach at least $90 million. The largest settlement reached thus far in the MDL was reached with Korean Air, which was ordered to pay $115,000,000 in penalties for their role in the price-fixing activities.

The case against the air cargo carriers were originally brought in 2006 when over 90 lawsuits were filed accusing the defendants of participating in a price-fixing scheme that artificially inflated the cost for air cargo shipping. Plaintiffs claimed that the leaders of the air cargo companies would meet in secret and coordinate illegally to keep prices above the market level. The antitrust behavior was identified for air cargo coming to and leaving the U.S.

The air cargo price-fixing scheme allegedly took place between 2000 and 2006 with an enormous scope that involved dozens of carriers coordinating efforts to overcharge customers for their services. Much of the illegal activity took place through the price inflation of surcharges, such as the cost of gas on selected trips, that were free of competition and thus fixed at above-market rates.

The antitrust scheme was an international undertaking, with carriers in South Africa, Korea, the U.S. and Malaysia among many others taking part in the price-fixing practices. There have been arguments over who holds jurisdiction in the cases because of the worldwide nature of the antitrust activity. The MDL is centralized in the Eastern District of New York and many of the legal action against the carriers has progressed there without issue, though the dismissal of indirect purchasers was upheld by the Second Circuit Court of Appeals after finding that that group of plaintiffs filed claims that were outside of the jurisdiction of U.S. courts.

In addition to the private settlements that have been reached, criminal charges were also brought against the companies in the wake of the antitrust activity. The scope of the criminal investigation into the allegations was massive, with the Department of Justice and the European Commission both looking into the alleged price-fixing scheme. The final criminal penalty given to the carriers was in the neighborhood of $3 billion. The 21 air cargo carriers that were investigated criminally have been fined a combined $1.8 billion domestically for their antitrust activities. Final approval for the private settlements in the MDL have been awarded against 17 airline companies thus far, totaling nearly $500 million.