El Al, British Airways, Lufthansa Sued for Price-fixing

El Al and two foreign airlines - British Airways and Lufthansa - face a class-action suit in Israeli courts for allegedly colluding on ticket prices.

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The Lod Central District Court last Monday threw out a motion to dismiss the class-action motion against the three carriers. The court, headed by Judge Ofer Grosskopf, has not yet discussed whether the class action could proceed, though.

The motion is being brought by Hatzlaha, the Consumers’ Movement for the Promotion of a Fair Society and Economy, which accuses the three of acting as a cartel.

Hatzlaha is suing the airlines for NIS 613 million, of which El Al's share is NIS 473 million.

The target of the class motion is air freight prices, which was the subject of a global anti-trust investigation revealed in February 2006. Based on those findings, Hatzlaha claims the three airlines coordinated surcharges to the cost of air freight, such as extra charges for fuel and security adedd on top of the basic air cargo fee.

Different countries have commenced individual proceedings regarding cargo flown to or from it. None had been pursued in Israel yet, however, until Hatzlaha picked up the gauntlet. It filed its motion in February 2013, just before the statute of limitations applied.

Hatzlaha was formed in 2008 by a group of Israeli commercial lawyers, joined later by economists and accountants. Its goals include fair and proper law enforcement in issues relating to the economy and society.

In rejecting the airlines’ request to throw out the class-action motion, Judge Grosskopf elaborated that throwing out class actions is well and good when the actions are frivolous; it spares the court precious time. But conversely, requests to toss such motions must also be serious and well-grounded, he wrote.

Judge Grosskopf ordered each airline to pay NIS 50,000 to Hatzlaha for court costs.

“The court conveyed an important message to the defendants that bringing a motion to dismiss out of hand was not a good idea except in unusual cases," stated Hatzlaha’s legal adviser, Elad Mann.