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“Nod and a wink” costs Kuehne + Nagel over NZ$3.1 million

AUCKLAND: Kuehne + Nagel International has been fined NZ$3.1 million plus costs of up to NZ$100,000 for its role in a New Zealand-based airfreight cartel.

The Swiss-based logistics giant was the holdout defendant in cartel case brought by the New Zealand Commerce Commission in 2007 against six forwarders who have now been fined a total of NZ$11.95 million. The other five were DB Schenker; Bax Global (now part of DB Schenker); Panalpina World Transport (Holdings) Ltd; EGL (now part of CEVA Logistics) and Geologistics International (Bermuda) Limited.

KN AucklandFollowing a whistleblower filing, the other defendants admitted their roles and paid fines totaling NZ$8.85 million in 2010 and 2011. However Kuehne + Nagel challenged the Commission's jurisdiction over its role in the self-described 'Gardening Club' cartel that hit customers with a 'security' surcharge on airfreight shipments between the UK and New Zealand.

"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," explained Commission chairman Mark Berry. "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.'

"When members lacked confidence that cartel members were performing the illegal agreement, they emailed [each other] 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...'" he added.

In December 2010, EGL settled with the Commission and was ordered to pay a penalty of NZ$1.15 million. In the same month, Geologistics International (Bermuda) Limited also settled and paid NZ$2.5 million. In June the following year, BAX Global, Schenker AG and Panalpina World Transport (Holdings) Ltd agreed to pay fines of NZ$1.4 million, NZ$1.1 million and NZ$2.7 million respectively.

"This case involves deliberate and secretive conduct by the freight forwarding companies, but it's important for businesses to recognise that cartels can also take on a less obvious form, like a conversation about pricing at a trade association meeting or a 'nod and a wink' agreement between competitors not to discount a certain product." said Berry.

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