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Ten freight firms fined S$7.2m for anti-competitive conduct

SINGAPORE — Ten freight-forwarding companies that move shipments from Japan to Singapore have been fined a combined S$7.2 million by the Competition Commission of Singapore (CCS) for price-fixing and other anti-competitive conduct.

Container ships and bulk carriers are seen in front of a fuel storage facility in the waters off the coast of Singapore. Reuters file photo

Container ships and bulk carriers are seen in front of a fuel storage facility in the waters off the coast of Singapore. Reuters file photo

SINGAPORE — Ten freight-forwarding companies that move shipments from Japan to Singapore have been fined a combined S$7.2 million by the Competition Commission of Singapore (CCS) for price-fixing and other anti-competitive conduct.

A total of 11 foreign-registered companies and their Singapore subsidiaries or affiliates were found to have infringed Section 34 of the Competition Act between Jan 1, 2006, and Nov 12, 2007. The CCS said the companies had collectively decided on fixing certain fees and surcharges relating to higher security and fuel costs, as well as exchanged information about prices and customers.

The 11 are Nippon Express, Yusen, K Line Logistics, Kintetsu World Express, Hankyu Hanshin, NNR, Vantec, Yamato, MOL Logistics, Nissin and DHL Global Forwarding. Together, they account for 40 to 60 per cent of shipments on the Japan-to-Singapore route.

This is the CCS’ second international cartel case after it imposed in May its largest financial penalty of S$9.3 million on Japanese ball-bearing manufacturers for fixing prices.

CCS chief executive Toh Han Li said of the latest case: “The conduct actually started in 2002 and 2004 depending on the surcharges, but we were not able to fine them for the period before 2006 because we didn’t have a competition law before that.”

The anti-competitive discussions among the companies took place in meetings of the Japan Aircargo Forwarders Association. The CCS found that during meetings from September 2002, the companies agreed not to use the fuel surcharge, levied on them by airlines following a rise in fuel prices, as a point of competition between them and to pass on the surcharge in full to customers. Subsequently, they met regularly to discuss their success in passing on these costs to customers.

On Feb 20, 2006, the companies came to a consensus on minimum prices that they would impose for the Japanese Security Surcharge and the Japanese Explosives Examination Fee for outgoing cargo from Japan, including that to Singapore. The CCS said there was evidence pointing to a significant mark-up in some instances. The companies also discussed how they were charging customers and how successful they were in collecting the charges.

For engaging in anti-competitive conduct, 10 of the freight-forwarding companies have been fined between S$64,000 and S$2.1 million. Nippon Express and Yusen were fined the heaviest — at about S$2.1 million and S$2 million, respectively.

DHL Global Forwarding was given full immunity under the CCS’ leniency programme after it blew the whistle on the cartel and cooperated during the investigations. Four other companies — Hankyu Hanshin, Kintetsu World Express, NNR and Vantec — were also given varying reductions in fines under the programme.

Mr Toh said: “Price-fixing among competitors is considered one of the most harmful types of anti-competitive conduct. It distorts the terms of trade between cartelists and their customers, with the latter not being able to enjoy competitively-determined rates.”

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