Commerce Commission v Cathay Pacific Airways Ltd - [2013] NZHC 843

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2008-404-8357 [2013] NZHC 843

UNDER Sections 27, 30 and 80 of the Commerce
Act 1986

BETWEEN THE COMMERCE COMMISSION Plaintiff

ANDCATHAY PACIFIC AIRWAYS LIMITED Defendant

Hearing: 19 February 2013

Appearances: Mr J C L Dixon and Ms A Boberg for the plaintiff
Mr I J Thain and Ms K L Broadhurst for the defendant

Judgment: 22 April 2013

JUDGMENT OF ALLAN J

In accordance with r 11.5 I direct that the Registrar endorse this judgment with the delivery time of 3.30 pm on Monday 22 April 2013

Solicitors:
Meredith Connell, Auckland john.dixon@meredithconnell.co.nz
DLA Phillips Fox, Auckland iain.thain@dlaphillipsfox.com

THE COMMERCE COMMISSION V CATHAY PACIFIC AIRWAYS LIMITED HC AK CIV-2008-404-8357 [22 April 2013]

Introduction

[1] The defendant, Cathay Pacific Airways Ltd (Cathay Pacific) has admitted certain breaches of Part 2 of the Commerce Act 1986 (the Act) and has not denied other breaches. The Court is asked to impose a pecuniary penalty under the Act. The Commerce Commission (the Commission) and Cathay Pacific are agreed that, subject to the view of the Court, an aggregate penalty of $4.3 million is appropriate, together with costs totalling $259,079.18.

Background

[2] Cathay Pacific is an international airline with its global head office in the Hong Kong Special Administrative Region of the People’s Republic of China (Hong Kong). It is registered as an overseas company in New Zealand, under the Companies Act 1993. Throughout the period from January 2000 to February 2006, Cathay Pacific carried on business in New Zealand and elsewhere as a carrier by air of passengers and cargo. In broad terms, it was within the top 10 international airlines with respect to cargo volume and revenue passenger kilometres. It had between 14,000–19,000 staff worldwide and operated in approximately 35 countries.

[3] Throughout the period with which this case is concerned, Cathay Pacific maintained scheduled air services between Hong Kong and Auckland using its own aircraft.

[4] At all material times, Cathay Pacific and indeed other airlines, charged their customers a price for air cargo services that consisted of a base rate and various surcharges and fees, including a fuel surcharge, and from late October 2001 a security surcharge.

[5] For the purposes of this proceeding, Cathay Pacific and the Commission are agreed that separate markets existed during the relevant period for air cargo services between India and Singapore respectively, and New Zealand. A number of airlines competed with each other to supply air cargo services in these markets.

[6] The Commission’s allegations relate to Fuel Surcharge Agreements (FSA) and Security Surcharge Agreements (SSA), entered into with a number of other airlines in respect of the carriage of air cargo from India and Singapore respectively to New Zealand.

Fuel Surcharge Agreements

[7] In January 2000, Cathay Pacific and other international airlines, which were members of the Board of Airline Representatives (India) Cargo Sub-Committee, reached an agreement regarding the imposition of a fuel surcharge on cargo carried by air from India to New Zealand (the India…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] NZHC 843
Decision Date: 22 April 2013

CaseChat Overview and Summary

The case involves a dispute between the Commerce Commission (the Commission) and Cathay Pacific Airways Limited (Cathay Pacific) over breaches of the Commerce Act 1986. Cathay Pacific admitted to certain breaches and did not deny others, and the court was tasked with imposing a pecuniary penalty under the Act. The key legal issues were determining the appropriate penalty amount and whether certain mitigating factors should be considered. The court assessed the penalties by considering the statutory maxima, the nature and extent of the conduct, the degree of market power held by the defendant, and the role of the defendant in the impugned conduct. The court also took into account factors such as the duration of the contravening conduct, the seniority of the employees involved, the extent of any benefit derived, and the degree of cooperation with the Commission. After evaluating these factors, the court determined that an appropriate penalty within the range of $4.16–$4.48 million was suitable. The court approved the recommended penalty of $4.3 million and ordered Cathay Pacific to pay costs to the Commission of $159,079.18 for the stage one hearing and $100,000 for the Commission’s other Court costs.

Orders