Florist wins first round in airline cartel battle

An Auckland florist has won the first round in its cartel compensation battle against international airline Cargolux – which has failed to have the case dismissed on the grounds it was historic.

New Zealand Bloom is seeking compensation from its former freight company Cargolux, after it admitted fixing the price of fuel and security surcharges with other airlines.

The 1986 Commerce Act allows parties to pursue damages against a person contravening part 2 of the act, which includes anti-competition provisions.

But Cargolux sought to have the claim struck out, as it fell outside time limits prescribed in the act.

It said the alleged breach of the act arose out of agreements with airlines entered into in 2001, more than 10 years before NZ Bloom began proceedings in November last year.

It also claimed that – due to various media reports dated from February 2006 on investigations into the cartel agreements – the breach was discovered or easily discoverable more than three years before the action began.

NZ Bloom claimed that in its case the cartel agreements only came into effect when it began using Cargolux's services in 2004, and said the breach of the act was not reasonably discoverable until April 2011 when Cargolux's out-of-court settlement with the Commerce Commission was reported.

Associate Judge David Abbott at the High Court in Auckland said it was clear that the earliest date on which Cargolux's liability to NZ Bloom arose was the date on which Cargolux first imposed a surcharge on freight.

That date was July 2004, well-within the 10 year time limit under the act.

Although there were several international and local media reports on investigations into cartel arrangements involving Cargolux since 2006, he said that did not necessarily mean NZ Bloom had knowledge of them.

The florist had not clearly stated what reports it did or did not see, but the onus was on Cargolux to persuade him that NZ Bloom ought reasonably to have discovered the facts of the breach before November 2008 – three years before NZ Bloom filed its claim.

"It has not been able to do so."

The question of whether NZ Bloom should have discovered the facts would be a matter for trial.

"At this stage I cannot say whether discovery of the facts of the contravention was anything more than a mere possibility. I am not persuaded that discovery was something that "could well have happened"."

Associate Judge Abbott dismissed Cargolux's application and ordered it to file its statement of defence by 12 December 2012.

Cargolux was fined $6.2 million in the Auckland High Court last year for its role in an air freight cartel, after reaching the out-of-court settlement with the Commerce Commission.

NZ Bloom managing director David Ballard declined to comment on the case while it was still ongoing.

The company is based in Auckland and exports exotic and luxury flowers around the world. Its biggest markets are Japan and the United States.