News2009
Concerning the Cease and Desist and Penalty Payment Orders
Issued by the Japan Fair Trade Commission
2009/03/18
As previously announced KWE was one of the companies the subject of an on-site investigation by the Japan Fair Trade Commission (JFTC) of the international airfreight forwarders and their association that commenced on April 16, 2008. Further to that announcement, KWE advises that today it has received the cease and desist and penalty payment orders as outlined below.
KWE recognizing the seriousness of the resulting consequences has committed to the implementation of comprehensive, group wide measures to revise and strengthen its internal compliance systems and to prevent recurrence.
Details
1. Details of the Cease and Desist Orders
The JFTC determined there had been a breach of Article 3 of the Anti-Monopoly Act (Prohibition Against Unfair Restrictions on Trade) in respect of the freight charges and other fees specifically fuel surcharge(*1), AMS surcharge(*2), security surcharge(*3) and explosive substances inspection surcharge(*4) and that KWE colluded with other companies in setting those charges and fees and newly invoicing the cargo owners. Accordingly the JFTC ordered that KWE implement the required measures to ensure that it ceases and desists from corresponding acts in the future.
2. Details of the Penalty Payment Order
Amount of the Penalty Payment: 1,494.61 million yen
Due Date: June 19, 2009
3. KWE's Opinion and Response Policies
While KWE's viewpoint differs from the findings of the JFTC that it has committed acts in breach of the Anti-Monopoly Act (Price Fixing Cartel), after full and careful consideration, KWE has decided to accept the orders as described above and not to appeal the decision through the courts.
4. Effect on Income
The penalty payment as referred to above will be accounted for as an extraordinary expense in this fiscal period under the heading of Reserve for the Anti-Monopoly Act in the amount of 1,494.61 million yen. For details regarding the effect on predicted income, please refer to the document separately released today titled "Revision to the Forecast Financial Results for FY Ending March 31, 2009".
Notes
| *1 | The extraordinary fuel surcharge is the charge added to the cargo holder’s invoice in line with fluctuations in the price of jet fuel, separately determined by the airline companies. |
| *2 | The Automated Manifest System (AMS) surcharge is the charge added to the cargo holder’s invoice where the international airfreight forwarders use the AMS in respect of airfreight destined for the U.S. (or for airfreight shipped via the U.S.) in order to utilize the U.S. Customs Service’s “International Airfreight Prior Declaration System”. |
| *3 | The security surcharge is the charge added to the cargo holder’s invoice for the cost of the implementation of new security measures (security education and training, measures to prevent illegal contact by non-related parties and facilities management and maintenance) in accordance with the national civil aviation security program enacted by the Ministry of Land, Infrastructure, Transport and Tourism. |
| *4 | The explosive substances surcharge is the charge added to the cargo holder’s invoice for performing explosive substance inspections in accordance with the compulsory explosive substance inspections as designated by the Ministry of Land, Infrastructure, Transport and Tourism. (Inspections using explosive substance detection devices or equipment or opening cargo for visual inspection to ensure cargo safety.) |
