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July 21st, 2011:

UK lawyer seeks Asian plaintiffs for cartel case

South China Morning Post – 21 July 2011

Few firms from region act over airfreight price-fixing by airlines including Cathay Pacific

A partner in a London law firm will arrive in Beijing this weekend to start an Asian visit that aims to encourage cargo owners to seek compensation from airlines involved in a price-fixing cartel.

Anthony Maton, of Hausfeld LLP, said more than 300 firms, which paid at least US$3 billion in airfreight charges to 37 airlines including Cathay Pacific (SEHK: 0293), had so far signed up, but most were Western companies.

The Hausfeld action, expected to go to trial in London next year, is one of four compensation cases being brought globally against around 50 airlines over fuel surcharges on cargo between 2000 and 2006. Criminal prosecutions are taking place in six jurisdictions. Cathay Pacific has so far been fined US$145 million. It is appealing against some judgments.

Maton says there are various reasons firms in China, South Korea or Japan might not have acted: they may not understand that they can file a claim in London, some staff may be in denial and managers may be reluctant to admit being overcharged.

“You’ve got some instances of people who are reluctant to believe they have been stuffed,” Maton said. “Undeniably, Asian companies suffered losses as a result of the cartel.”

Putting the cart before the horse

South China Morning Post — 21 July 2011

As the Airport Authority’s campaign for a third runway at Hong Kong International Airport moves into high gear, it feels increasingly like the cart is being put before the horse. Promotional videos and materials are being churned out and the government’s three-month consultation is under way, with its focus on increasing capacity. Of course, the tens of billions of dollars involved dictate that every possible aspect has to be publicly examined and that there is a thorough debate. However, it ignores the fundamental point that increased capacity, allowing for vastly more aircraft to fly in and out, will not be fully utilised unless there is hard-and-fast agreement on flight paths with Shenzhen and Macau.

It is all a matter of airspace. As the authority pointed out in its technical report, fully realising the potential capacity gain of another runway requires redesigning flight paths over the Pearl River Delta region. Hong Kong would need “a northern circuit, long final approach tracks and independent arrival procedures”. As yet, despite three years of bargaining, no deal to allow these has been signed.

Civil Aviation Department officials are nonetheless positive. They say that consensus was recently reached, although they admit that nothing formal has yet been agreed. With all airports in the region competing for rapidly expanding business and jealous of what they have and eager for more, a signed-and-sealed deal is essential. Without it there can be no certainties or guarantees.

The authority has yet to reveal its budget for the campaign, and how much the consultation will cost taxpayers is equally uncertain. Both were rolled out with next to no public discussion. That they were launched without there even being certainty about whether there is a possibility that substantially more planes will be able to fly into Hong Kong seems, in the circumstances, presumptive. If public funds are not to be wasted, we should be handling such matters in the correct order – which, common sense would say, is to get airspace approvals first.

Ban on idling engines delayed

South China Morning Post – 21 July 2011

Legco panel accuses officials of a ‘breach of trust’ after department informs lawmakers of a three-month postponement in long-awaited legislation

A Legco panel has accused environmental officials of “cheating” by postponing for three months the law meant to ban idling engines.

Adding to lawmakers’ anger, a one-month grace period will be granted to offenders after the law takes effect on December 15 – three months after its intended implementation date and 10 months after the legislation was passed.

Carlson Chan Ka-shun, the deputy director of environmental protection, told Legco’s environment affairs panel that the ban had been delayed out of consideration for drivers in the hot weather, who tend to leave their engines running to power a vehicle’s air-conditioning system.

“My understanding all along is that everyone was hoping that the law would not take effect during the hottest days of the year,” Chan said. September was still part of the city’s hottest season.

He said the Environmental Protection Department also needed time to finalise technical details, such as the format of the penalty notice, and to include these in subsidiary legislation which Legco would be able to pass only after it resumes sittings in September.

Audrey Eu Yuet-mee, the panel’s deputy chairwoman, said she was dissatisfied with the delay, saying that “the government has always cheated. [The delay] has damaged our mutual trust”.

She said the legislation could instead have been introduced “in mid- or late October when it gets cooler.”

She criticised the government for failing to present the draft regulations yesterday, as it had promised to do when lobbying lawmakers to pass the law in March.

Democrat Kam Nai-wai said he doubted whether the ban could be executed in December, given that officials had shown little progress in arranging publicity and training staff.

Chan replied that 18 police officers and one environmental inspector had been assigned to prepare the work and that they would receive training in September.

The law, which has 20 exemptions, was passed in early March after 10 years of debate over the desirability of such a policy.

After negotiations with the transport industry had been completed, the result represented a much toned-down version of a proposal made by the government in 2007. The original ban offered no grace period, no exemption on bad-weather days, and excluded only the first two taxis and minibuses waiting at a rank.

Changes were introduced in 2009 to exempt more taxis and minibuses, and to cover buses with at least one passenger on board. A three-minute grace period was also introduced. The ban will be suspended on any day when the Observatory issues warnings for storms or very hot weather. The ban will apply to all roads in Hong Kong. Drivers caught parked with their engines running will be fined HK$320.

Thomas Choi Ka-man, a spokesman for Friends of the Earth, said he was disappointed. “The ban has been so much watered down and now it’s further delayed. I wonder how determined the government is in executing its policy.”

Choi said it would be more helpful to enforcement officers if the ban was launched in summer along with the one-month trial period, as hot days should be the time when most disputes arose over its implementation.

Man Chi-sum, of Green Power, said the delay was a political consideration to avoid strong reaction from the transport industry but was at the expense of pedestrians, street vendors and workers.

Airlines face soaring claims over fuel fix

South China Morning Post – 21 July 2011

Freight clients urged to sign up with law firms pursuing airlines for damages after European Commission’s finding of collusion in fuel surcharges

Top Asian and western airlines, including Cathay Pacific Airways (SEHK: 0293), Singapore Airlines Cargo and Korean Airlines, will face further pressure from global criminal and civil action over allegations they colluded to fix fuel surcharges on air cargo shipments between 2000 and 2006.

London-based lawyer Anthony Maton will step up that pressure when he begins a visit to Asia this weekend to persuade exporters and importers to lodge compensation claims against 37 airlines which flew cargo between Asia and Europe. They include 11 carriers who were fined €799.5 million (HK$8.8 billion) by the European Commission last year for fixing airfreight surcharges.

Maton, from Hausfeld & Co LLP, said Asian firms, including mainland cargo owners, undoubtedly suffered losses as a result of what he described as cartel-like behaviour by airlines in fixing fuel surcharges. So far more than 300 firms, who paid freight bills totalling at least US$3 billion, have signed up to Hausfeld’s action, but Maton said these numbers “are increasing all the time”.

“We are steadily signing and then joining in batches further claimants to the action,” he said.

Maton said that while most of the airlines were appealing against the European Commission fines, he doubted this would derail the compensation claims.

This view was shared by Peter Koutsoukis, managing director of Claims Funding International, who has launched a separate compensation claim at a court in Amsterdam in the Netherlands against three airlines – Dutch carriers KLM and Martinair and French partner Air France. Claims Funding International has formed a special company, Equilib, to fight the action on behalf of claimants which total at least 330 mainly European companies which spent around €6 billion on airfreight.

Koutsoukis said the three airlines filed a writ in an Amsterdam court asking that other airlines be joined, either as defendants or third parties to the action. These carriers, including Cathay Pacific Airways, have until August 17 to file a defence saying why they should not be included in the action.

Carriers are also facing a slew of legal action in Asia.

In Australia, nine carriers are being prosecuted by the Australian Competition and Consumer Commission for alleged price fixing after six were fined A$41 million (HK$340.7 million). The carriers, including Cathay Pacific, Emirates Airlines, Thai Airways and Garuda, face the latest in a series of directions hearings at Australia’s federal court on August 5. The full trial against all nine carriers is due to start on July 2 next year and last three months.

In New Zealand, the Commerce Commission is taking action against the same group, although Air New Zealand has replaced Garuda.

Commission communications manager Alanah Kalafatelis said the court proceedings were taking place in two stages. The first stage, which focused on the definition of the air cargo market ended in June. She said the second stage of the trial, which was due to start in July 2012 and last about three months, would “address the price fixing arrangements”.

Australian law firm Maurice Blackburn has also launched a class action, financed by litigation funder IMF (Australia), against seven carriers, again including Cathay Pacific Airways, seeking compensation for alleged price fixing on cargo shipments. All seven airlines have filed defences to the action.

Maurice Blackburn principal Brooke Dellavedova said action was taken against the seven carriers even though the Australian Competition and Consumer Commission prosecuted 15 airlines, because “for the most part, they are the carriers with the most significant presence in Australia”.

She said more than 150 businesses had retained Maurice Blackburn to act for them. “We are unable to comment on the size of any overcharge caused by the alleged cartel at this stage,” she said. “However, we expect damages in this matter to be very significant given the large amount of international airfreight to and from Australia.”