Expeditors Receives a €4.14 Million Fine in European Commission Freight Forwarding Case
29 März 2012 - 3:00PM
Business Wire
Expeditors International of Washington, Inc. (“Expeditors”)
(NASDAQ:EXPD), the international freight forwarding and logistics
company, said today that it is the recipient of a €4.14 million
(approximately $5.5 million) fine issued by the European Commission
(“EC”) pursuant to proceedings initiated by the EC’s February 5,
2010 Statement of Objections, which included allegations of
anti-competitive behavior. The EC’s decision levied fines against
international freight forwarders based on four separate
infringements: New Export System (“NES”), Advanced Manifest System
(“AMS”), Currency Adjustment Factor (“CAF”) and Peak Season
Surcharge (“PSS”). The EC’s allegations against Expeditors were
limited to an alleged unlawful agreement for only PSS, on the South
China/Hong Kong to Europe route for the period of September 21,
2005 to June 23, 2006, which surcharges represented less than $1.5
million in the aggregate over that time period. According to the
EC, PSS fines were based on:
“. . . freight forwarders agree[ments] in so
called ‘Breakfast Meetings’ held in Hong Kong on the introduction
and timing of a PSS, to be charged during the peak season transport
period in the run up to Christmas (lasting generally from September
to December) and on occasions also discussed the level of the
surcharge.”1
The EC’s press release, including details of all fines issued
for the alleged infringements, can be viewed on its website.1
Expeditors has vigorously denied having entered into any
unlawful agreement with its competitors and aggressively defended
its position against these allegations throughout the EC’s
investigation. As recently as the 16th of March, Expeditors further
defended its position in a so-called “State of Play” meeting with
the EC, which was attended by the Director of the EC’s Cartel
Directorate and members of the EC case team.
“We obviously disagree with the EC’s decision in this matter; it
is particularly disheartening given that we were in discussions
with them [the EC] just eight business days ago, where we presented
very strong evidence documenting our independent conduct,” said
Peter J. Rose, Chairman and Chief Executive Officer. “We believe
the EC ignored these facts and we have concerns over how the laws
were applied, as well as how the fines were calculated. Despite
having been issued one of the smaller fines, it is the
‘non-financial’ issues more than the financial considerations that
concern us most about this ruling. We have stated all along, and
strongly reiterate today, that we did not enter into any agreement,
in any way, that affected pricing to our customers. The evidence we
presented to the EC is very clear as to this matter. It is also
somewhat troubling, and a little ironic to us, that the world’s
largest freight forwarder [DHL, the EC’s immunity applicant], who
allegedly organized, orchestrated and perpetuated these so-called
‘Breakfast Club’ meetings in Hong Kong, has not been penalized at
all for these actions. In our opinion, it’s almost as if they’ve
attempted to turn this into a competitive advantage . . . a point
we raised in the oral hearing as well,” Rose concluded.
Under the EC rules, the company must pay the fine or provide a
bank guarantee even if it makes a decision to appeal the EC’s
decision, once it receives and analyzes the EC’s ruling in its
entirety. The company expects to accrue the fine amount in its
first quarter 2012 financial results.
1http://europa.eu/rapid/pressReleasesAction.do?reference=IP/12/314&format=HTML&aged=0&language=EN&guiLanguage=en
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