Panalpina Agrees to Pay $35 Million in Class Action on Forwarding Industry Rate-Fixing
Swiss logistics giant Panalpina agreed to pay $35 million to settle a class action lawsuit related to an alleged forwarding industry price-fixing scheme. The company announced on Oct. 23 it reached preliminary agreement to settle allegations that it violated anti-trust laws by conspiring with other forwarders to set surcharges related to fuel, security requirements, and currency and peak season adjustments. In a statement on its website, Panalpina said, "Panalpina agreed to enter into the current settlement agreement to avoid cost and risk of trial." Other major forwarders have already settled the claims, including Kuehne + Nagel, Schenker / BAX Global, Expeditors International, and UTi International. Many were also subject to penalties imposed by the U.S. Federal Trade Commission, the European Commission, and the Japanese Foreign Trade Commission.
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The class action plaintiffs say they represent anybody who bought U.S. freight forwarding services from any of the defendants between Jan. 1, 2001 and Sept. 14, 2012. The deadline to submit a claim form, and share in the settlement fund, is Nov. 22 (here). Plaintiffs' attorneys recently applied to increase their take of the lawsuit’s proceeds to $16,853,536, or 15 percent. Objections to the increase are due by Nov. 8.
Rate Fixing Conspiracies Proliferate After 9/11, Complaint Says
The lawsuit alleges that since 2001, major forwarding companies have been colluding to set surcharges on their U.S. forwarding services (here). Top officials from major forwarding companies regularly met, including through meetings of trade associations such as Freight Forwarders Europe (now Freight Forwarders International) and the Shanghai International Freight Forwarders Association, in order to collude on minimum surcharge rates, the complaint said. Their collusion allowed them to charge higher fees for forwarding without putting themselves at a competitive disadvantage, plaintiffs said. The complaint alleges that many surcharge agreements were directed by a “Global Agreement” that counted as its parties DHL, Schenker, Kuehne + Nagel, Geo-Logistics, Panalpina, UTi, ABX and Exel, which began meeting in 2002 in response to increasing compliance and fuel costs that resulted from the Sept. 11, 2001 terrorist attacks.
The complaint alleges that freight forwarders, including Panalpina, colluded to set the following surcharges:
- 2001 Security Surcharge*
- 2002 Fuel Surcharges
- 2002 New Export System Fee*
- CBP Air Automated Manifest System (AMS) Charge (Japanese defendants)
- 2005 Chinese Currency Adjustment Factor*
- 2005, 2006, and 2007 Peak Season Rate Increase*
- 2006 Security and Explosives Examination Surcharges
- CBP Air AMS Charge (European defendants)*
- CBP Ocean AMS Charge Agreement (Japanese defendants)
*The complaint alleges Panalpina was party to this agreement.
For example, on Oct. 1, 2011, the Air Freight Committee of Freight Forwarders Europe held a conference call that included officials from ABS, DHL, Exel, Geo Logistics, Kuehne + Nagel, and was chaired by a high-ranking executive from Panalpina, the complaint said. During the call, the participants agreed to impose on their customers a security surcharge of €0.15 per kilo (at that time U.S. $0.13 per kilo) for air freight shipments anywhere including shipments into, out of, and within the U.S.
Panalpina already pleaded guilty, along with other forwarders, to FTC charges related to the price-fixing between 2002 and 2007, and was fined nearly $12 million (see 10100132). Those charges included colluding to set the peak season, currency adjustment, and air AMS surcharges. The EU fined Panalpina €46.3 million for those same conspiracies, the complaint said. The $35 million Panalpina has agreed to pay to settle this class action lawsuit includes $5.8 million the company has already paid in unrelated class action suit, the forwarder said.
The following companies have already agreed to settle the class action suit: ABX Logistics, EGL, Expeditors International, Kuehne + Nagel, Morrison Express, Nishi Nippon, Schenker, SDV, United Aircargo Consolidators, UTi, and Vantec. For a full list of all 67 defendants alleged to have participated in the rate-fixing conspiracies, see (here).
The lawsuit is titled Precision Associates, Inc. v. Panalpina World Transport (Holding) Ltd., presided over by Judge John Gleeson of the U.S. District Court for the Eastern District of New York.