Garuda breaches competition and consumer protection laws

Garuda Indonesia has been penalised for cartel conduct after a 10-year long legal battle.

In May 2019, the Federal Court of Australia ordered Garuda to pay a penalty of AUD$15 million for breaching Australian competition and consumer protection laws. Garuda was found to have engaged in various price fixes on the supply of air freight services. The Court heard evidence that Garuda and other international airlines had formed committees which agreed to set fuel, security and customs charges at predetermined levels. The Court ordered Garuda to pay an additional $4 million for imposed insurance and fuel surcharges from Hong Kong-based airports.

Regulators worldwide continue to take legal action against airlines for anti-competitive practices. The Australian Competition and Consumer Protection Commission (ACCC) has commenced legal action against 14 international airlines for engaging in price fixing between 2003 and 2006, with issued penalties totalling $132.5 million. Numerous international airlines, including Qantas Airways, Singapore Airlines Cargo and Air New Zealand, were found to have breached competition law. The ACCC’s determined pursuit of Garuda and the amount of the fines awarded illustrates the ACCC’s strong stance against anti-competitive behaviour.

In addition to cartel conduct, the ACCC has taken enforcement action against airlines for misleading consumers about their rights under Australian Consumer Law (ACL). Major Australian airlines like Virgin Australia and Qantas have given court-enforced undertakings to bring their policies in line with the ACL. Jetstar however, has been less fortunate, as blanket “no refund” statements on its website led customers to believe their flight tickets were ineligible for refunds. Jetstar admitted liability and was ordered to pay $1.95 million for making misleading statements about consumer rights under the ACL.

Source: Australian Competition & Consumer CommissionACCC


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