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EU Fines 11 Airlines for running a freight cartel

November 9, 2010

Bloomberg:

Air France-KLM Group and British Airways Plc were among 11 carriers fined a total of 799.4 million euros ($1.1 billion) by European Union regulators for coordinating fuel and security fees following the 2001 terrorist attacks.

Air France and its units got the biggest fine of 339.6 million euros. British Airways was fined 104 million euros and SAS Group AB got a 70.2 million-euros penalty, the European Commission said. Cargolux Airlines International SA, Europe’s third-biggest air-freight carrier, was fined 79.9 million euros.

“It is deplorable that so many major airlines coordinated their pricing,” EU Competition Commissioner Joaquin Almuniasaid. The extra costs in the aftermath of the attacks on Sept. 11, 2001, weren’t “an acceptable reason to stop competing,” Almunia told reporters.

U.S. authorities have already fined 18 airlines at least $1.6 billion and filed criminal charges against 14 executives for price-fixing.

Under EU rules, companies can be fined 10 percent of annual sales for antitrust violations. The commission typically opts for a penalty of from 2 percent to 3 percent of sales in cartel cases. Companies may appeal to EU courts.

The Journal of Commerce:

Air France KLM and British Airways, which were fined $350 million and $300 million respectively in the U.S., are among airlines facing substantial fines from the EU. Cathay Pacific, Japan Airlines, Alitalia and All Nippon Airways have earlier confirmed they have been investigated.

Lufthansa, Europe’s largest cargo carrier, is not facing a fine as it informed the Commission about the cartel’s activities.

The Commission’s decision will have an impact on several pending legal actions by shippers seeking damages they suffered due to the cartel’s activities. Several hundred European shippers, led by Swedish telecoms group Ericsson and Dutch electronics giant Philips, are suing Air France-KLM and its Martinair subsidiary for $560 million.

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German economic motor is still running strong

October 15, 2010

The weaknesses in various Eurozone countries are depressing the value of the Euro but this is contributing to the continued strong exports from Germany. The GDP growth forecast for 2010 has been revised upwards to 3.5%. A second recession in the US and global reduction of stimulus programmes through 2011 could depress exports but the hope is that lower unemployment and wage increases would favour the strengthening domestic consumption to be able to compensate.

 

Exports helped the German economy rebound quickly

Exports helped the German economy rebound quickly

 

Deutsche Welle: German economy on course for strongest growth in decades

Five leading think tanks have predicted that the German economy will grow by 3.5 percent in 2010, up from a more modest prediction of 1.5 percent earlier this year. Unemployment is expected to drop below three million. In their twice-yearly report, Germany’s five leading economic think tanks also included ….. a sharp increase in exports in the first half of the year (which has) fuelled the rebound from the deepest recession since World War II.

“The upturn is stable,” said Kai Carstensen from the Munich-based Ifo institute, one of the think tanks involved in the report. “In Germany, it looks good. The risks are above all overseas.” In Germany, Berlin plans to bring the country’s finances back into shape by cutting back on government spending. The move could lead to the deficit falling below three percent of gross domestic product, the ceiling set out for Euopean Union countries that use the euro currency.

And Der Spiegel points out that

the DAX, Germany’s stock exchange index, topped 6,400 on Wednesday, reaching a level not seen since just days before the collapse of the US investment bank Lehman Brothers.

The report also indicated that climbing tax revenues will result in a 2011 budget deficit of just 2.7 percent, below the 3.0 percent maximum allowed by European Union rules. German wages are forecast to rise by up to 2.8 percent in 2011. The economic experts who authored the report anticipate that domestic consumption will continue to be strong next year as a result.

The report, which is used by the German government to develop its own economic forecasts, was not without warnings. A renewed recession in the US remains possible, the report warns, as does a massive correction in the overheated Chinese real estate market.

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A mix of prudence and optimism: Swedish GDP forecast up to 4.8%

October 12, 2010

The Swedish moderate/centre/ right coalition government presents its autumn budget proposal today. The previously expected growth of 4.5% has been revised upwards to 4.8%. But a strong level of prudence is still included with GDP assumed to be 3.7% next year instead of 4.0%. Though the coalition government is only just in a minority the budget is expected to pass in parliament. The main focus is on unemployment and job creation with the objective to reduce unemployment from the current 8.4% to 8.0% next year.

Sweden sticks out in Europe with its relatively high export-led growth.

Free translation from SvT:

http://svt.se/2.22620/1.2188350/regeringen_andrar_prognos

Unemployment as a share of the workforce aged 15-74 years will be 8.4 % this year and fall to 8.0% next year. Unemployment will continue to fall gradually to 6.0% in 2014.
Consumer price index is expected to grow by 1.2 % this year and by 1.5 % next
year. “The government’s main goal is to bring Sweden back to full employment. We will therefore continue to work to strengthen employment and reduce exclusion, “said Finance Minister Anders Borg (M) according to a press release.
“But Sweden is still at a low activity level with high unemployment. And there are still risks that the development could be worse than expected. It is therefore important that we ensure that public finances are in surplus and that we prevent unemployment from remaining stuck at a high level. We must make use of the coming years of high growth to include those who have had difficulty to enter the labour market” said Finance Minister Anders Borg.

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China steps in to support Greece (and the EU)

October 3, 2010
Wen Jiabao (温家宝), Chinese Premier

Image via Wikipedia

China is now too big a player to take lightly and I see the Euro strengthening.

Dagens Industri:

(My translation)

On Saturday China entered into an EU- country’s economy by promising strong financial support to crisis-hit Greece. “When Greece has problems, China is prepared to offer all the help it can” said the Chinese Prime Minister Wen Jiabao at a press conference in Athens together with his Greek counterpart, Giorgos Papandreou sfter they had held bilateral discussions.

China, according to Wen Jiabao, will help finance the purchase of
Chinese ships to the Greek shipping industry by creating  a
Fund worth five billion U.S. dollars (about 34 billion SEK). “China is willing to join together with the EU – as a passenger in the same boat – to strengthen cooperation to meet the financial crisis, said the Chinese Prime Minister. Crisis-hit Greece also had the promise of Chinese investment, including for the port of Piraeus and for import of Greek
goods. The Chinese also promised purchases of Greek government bonds.
“Greece has been effective in its handling of the debt crisis”, continued Wen Jiabao, who spoke through an interpreter at a press conference.

He also stressed that the EU and the IMF aid package to Greece had
yielded positive results and that he sees the Greek economy recovering in line with the global economy. Papandreou, for his part said that China’s plans to support Greece is an expression of confidence in Greece.

Wen Jiabao will speak to the Greek Parliament on Sunday before moving on to Brussels to attend a meeting between EU and Asian leaders. Then he goes on to Germany, Italy and Turkey.

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Posted in China, Economy, European Union, Greece | 3 Comments »

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