Managing the Legal Environment

Case Study FOUR: Airlines and Strategy for Change

Introduction:

Between 2010 and 14, various competition watchdogs around the western world were investigating, and ultimately taking action against, some high profile airlines over alleged price fixing for freight services under cartel arrangements dating back to 1996 and with the advent of fuel levies by 17 different airline companies (see links (below) and other information for further information and outcomes of the cases).

http://www.smh.com.au/business/aviation/accc–fights-back-over-air-new-zealand-garuda-cartel-decision-20141216-128sbu.html

https://www.accc.gov.au/media-release/cathay-pacific-and-singapore-airlines-to-pay-23-million-in-penalties-for-price-fixing
https://www.accc.gov.au/media-release/emirates-ordered-to-pay-10-million-for-price-fixing

http://www.freightcostsolutions.com.au/price-fixing-how-prevalent-is-it-really/

http://www.theaustralian.com.au/news/nation/qantas-one-of-11-airlines-fined-11-billion-for-colluding-on-cargo-pricing/story-e6frg6nf-1225950672317

http://www.aircargonews.net/news/single-view/news/airlines-respond-to-price-fixing-charges.html

http://www.aircargonews.net/news/single-view/news/us-charges-japanese-airlines-execs-with-price-fixing.html

The series of investigations and actions raise questions about the following:

Questions:

  • In general terms, what were the airlines accused of doing and why?
  • Why are these accusations so important both to the airlines (and other companies in terms of their forward planning for risk management) and for the enforcement agencies involved?
  • What difficulties are there for such agencies in attempting to take enforcement action against such companies?
  • What does this example suggest as to the role of, and limitations to, national law and institutions in managing and regulating behaviour in a global economy?….

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