Bermuda Based Freight Firm Fined $687,960

October 2, 2010

mounds-of-cashSix international freight forwarders, including one domiciled in Bermuda, have agreed to plead guilty and to pay criminal fines totaling $50.27 million for their roles in several conspiracies to fix a variety of fees and charges in connection with the provision of freight forwarding services for international air cargo shipments.

According to charges filed separately in U.S. District Court for the District of Columbia, six companies—EGL Inc., Kühne + Nagel International AG, Panalpina World Transport (Holding) Ltd., Schenker AG, BAX Global Inc., and Geologistics International Management (Bermuda) Limited, based in Hamilton, Bermuda —engaged in one or more separate conspiracies to impose certain charges or fees on customers purchasing international freight forwarding services for cargo freight destined for air shipment to the United States during various periods between 2002 and 2007.

Under the plea agreements, which are subject to court approval, the six companies have agreed to pay the following criminal fines: EGL, $4,486,120; K+N, $9,865,044; Panalpina, $11,947,845; Schenker, $3,535,514; BAX Global, $19,745,927, with the Bermuda-domiciled Geologistics paying a a significantly lower fine of $$687,960.

“The department’s investigation uncovered six different conspiracies harming businesses and consumers in the United States and across the globe,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Our investigation continues in this important industry.”

According to the charges, the companies allegedly carried out the various conspiracies by, among other things, agreeing during meetings and discussions to coordinate various charges and fees on customers purchasing international freight forwarding services for cargo freight destined for air shipment to the United States.

According to the U.S. Department of Justice, the six alleged conspiracies being charged are:

• A global conspiracy that took place from March 2003 to October 2007, to impose an Air Automated Manifest System (AAMS) fee on international air shipments of cargo to the United States, in which EGL, Geologistics and Panalpina and others participated;

• A conspiracy that took place from July 2004 to October 2007, to impose an AAMS fee on shipments from Germany to the United States, in which K+N, Schenker and others participated;

• A conspiracy that took place from March 2004 to October 2007, to impose an AAMS fee on shipments from Switzerland to the United States, in which K+N and others participated;

• A conspiracy that took place from October 2002 to October 2007, to impose a New Export System (NES) fee on international air shipments from the United Kingdom to the United States, in which EGL, K+N, BAX and others participated;

• A conspiracy that took place from July 2005 to June 2006, to impose a Currency Adjustment Factor (CAF) on international air shipments from China to the United States, in which K+N, Panalpina, Schenker, BAX and others participated; and

• A conspiracy that took place from August 2005 to December 2007, to impose a Peak Season Surcharge (PSS) on shipments from Hong Kong to the United States, in which K+N, Panalpina, Schenker, BAX and others participated.

Each company is charged with price fixing in violation of the Sherman Act, which carries a maximum fine of $100 million per offense for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The charges are the result of a joint investigation into the freight forwarding industry being conducted by the Antitrust Division’s National Criminal Enforcement Section, the FBI’s Washington Field Office and the Department of Commerce’s Office of Inspector General.

In addition, Reuters reports that eighteen airlines have pleaded guilty or agreed to do so in connection with the investigation, including British Airways, Korean Air Lines, Qantas Airways, Japan Airlines, Cathay Pacific Airways, Air France, EL AL Israel Airlines Ltd, Nippon Cargo Airlines Co Ltd and China Airlines

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