JAL pleads guilty, is fined $110 million over air cargo cartel

WASHINGTON (Kyodo) Japan Airlines International Co. has agreed to plead guilty and pay a $110 million criminal fine for its role in a cartel to fix rates for international cargo shipments, the U.S. Justice Department said Wednesday.

In Tokyo, JAL said it has reached a plea agreement with the Justice Department. It said in a statement that entering into the agreement is "the best resolution" for the company. JAL "will determinedly continue to expand and reinforce its current antitrust compliance program."

The airline engaged in a conspiracy in the United States and elsewhere to eliminate competition by fixing the rates for international shipments of cargo to and from the U.S. and elsewhere from April 2000 to February 2006, the department said.

JAL was the largest shipper of air cargo between Japan and the U.S. between around early April 2000 and February 2006, earning almost $2 billion from its traffic during the period, the department said.

"This price-fixing conspiracy inflicted a heavy toll on American businesses and consumers," said Thomas Barnett, assistant attorney general in charge of the department's antitrust division.

"Japan Airlines is the fourth cargo carrier to admit to its involvement in this cartel and to agree to cooperate with an ongoing investigation," he said in a statement.

JAL pleaded guilty to the charges, filed in the U.S. District Court for the District of Columbia, and agreed to cooperate with the department in its investigation, the department said.

JAL's case came after British Airways PLC, Korean Air Co. and Australia's Qantas Airways Ltd. agreed last year to plead guilty and pay hefty criminal fines for fixing rates. BA and Korean Air paid $300 million and Qantas Airways paid $61 million.

JAL's cargo business offices in New York and Frankfurt were raided in 2006. JAL has already set aside almost the same amount of loss reserve as the fine in its earnings report for the April-September first half of the business year that ended in March.

The air transport industry has introduced additional rates to absorb the adverse effects of higher fuel costs resulting from soaring crude oil prices, as well as to tighten security at airports. U.S. and European authorities suspect airlines have conspired to levy additional rates.