Cargo case: key witness retracts evidence

Media release
9 May 2013

Air New Zealand calls for common sense in Cargo case after key witness retracts evidence

Air New Zealand is calling on the New Zealand Commerce Commission to end its multimillion dollar pursuit of the airline following the retraction under oath of a key piece of evidence.

Air New Zealand General Counsel John Blair says it has become clearer than ever in the past week that the Commerce Commission’s quest should end.

“As a state regulator with strict responsibilities to ensure fairness and objectivity it is untenable for the Commission to try to enforce a settlement agreement with Air New Zealand when a key piece of its evidence has been retracted under oath.” The evidence cannot be disclosed as it remains confidential under USA Court orders.

“Air New Zealand remains adamant it has not breached New Zealand competition law.”

Air New Zealand urges the Commission to now resolve the matter either by further discussion or by proceeding with a Court of Appeal hearing to determine the unresolved issue of the meaning of ‘market’ under the Commerce Act.

“A decision of the High Court in 2011 held that the legal scope of the term ‘markets in New Zealand’ extends to markets anywhere in the world that goods originate as air cargo. This meant that business conducted in places like Japan and Hong Kong, where local regulators closely supervise cargo rates and surcharges, also became subject to the Commission’s jurisdiction. The Commission has pursued allegations involving business conducted in overseas locations but has made no allegation against Air New Zealand of illegal conduct in New Zealand,” he says.

Air New Zealand and seven other international airlines operating to New Zealand appealed the High Court “market” decision, but by agreement the appeal hearing was deferred until after a trial involving factual allegations. Following settlement by other airlines, Air New Zealand is the only remaining defendant.

“It makes sense to first clarify the term ‘market’. If Air New Zealand’s appeal on that one issue succeeds, any prior trial will have been a complete waste of time and taxpayer money. Air New Zealand has spent more than $10 million to date defending itself in this investigation and the Commission’s costs are likely to be in the seven figure range too. There seems little point in either party spending a single cent more when the Commission knows that a key piece of its original evidence has been retracted under oath.

“This matter has run for more than seven years and involves allegations relating to business conducted as long as thirteen years ago. We have satisfied regulators in Europe and the USA concerning our conduct and are close to the end of our defence of allegations in Australia. In the New Zealand market, it is time for common sense to prevail.”

Ends

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