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Last Updated: Wednesday, 15 February 2006, 16:09 GMT
Air cartel probe expands to Asia
Cargo waiting to be loaded onto a Korean Air plane in Seoul
Korean Air is among the airlines being investigated
The probe into alleged price-fixing by airline cargo businesses has widened with investigators raiding the premises of several leading Asian carriers.

Japanese, South Korean and Hong Kong airlines confirmed that competition officials had taken documents from offices in Asia, Europe and the US.

The FBI also said it had raided Air France and KLM premises in Chicago.

The probe began on Tuesday when officials from Brussels and Washington raided offices and sought information.

Other airlines targeted have been British Airways, Lufthansa, SAS, American Airlines, United Airlines and Singapore Airlines.

Airline cooperation

It is believed investigators from the European Commission and US Department of Justice are trying to establish whether airlines operated a cartel by colluding over fuel surcharges and other levies for cargo handling in recent years.

This is a very heavy procedure
Marc Boudier, Air France Cargo

The airlines concerned have promised to co-operate with the authorities, while maintaining they believed they had behaved properly.

But one airline executive said he had been taken aback by the extent of the investigation.

"We are surprised because this is a very heavy procedure," Marc Boudier, executive vice president of Air France Cargo, told Reuters.

Officials from the European Commission raided the Frankfurt cargo office of Japan Airlines, Asia's largest airline, on Wednesday.

Hong Kong carrier Cathay Pacific said its offices in Frankfurt, Los Angeles and San Francisco had been raided and that documents had been removed.

The airline denied any wrongdoing.

"Cathay is a law-abiding company," a spokeswoman said.

In Korea, investigators from the Fair Trade Commission raided offices of Korean Air and Asiana, the country's two largest airlines.

Korean Air, the world's largest cargo carrier in 2004, said it did not know the reason for the raid but said it would co-operate with the authorities.

Cartel concerns

The European Commission said on Tuesday that the raids were triggered by concerns that "the companies concerned may have violated rules on cartels and restricted business practices".

It has emphasised that the raids did not necessarily mean that the airlines were guilty of anti-competitive behaviour.

The probe has come at a tricky time for many airlines as they battle high fuel costs and lower-priced competitors.

British Airways aeroplanes' tailfins
British Airways said it was cooperating with the authorities

Freight traffic accounts for about 12% of the industry's revenues, according to the International Air Transport Association, and is expected to outstrip growth in passenger traffic in the future.

Analysts said that a trans-Atlantic probe can prove costly and distracting, even if a company is not guilty of any wrongdoing.

Should a firm be found guilty of anti-competitive and cartel behaviour then the European Commission can levy a fine of up to 10% of its annual sales. In the US, cartel behaviour can lead to prison sentences.

British Airways said on Tuesday that it would assist the authorities in their investigation.

"British Airways' policy is to conduct its business in full compliance with all the applicable competition laws," it said.


BBC NEWS: VIDEO AND AUDIO
Details of the raids carried out on airlines



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