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US: FedEx subpoenaed in US probe of cargo industry

Reuters
July 14th, 2006

FedEx Corp. (FDX.N: Quote, Profile, Research) said on Friday that it has received a grand jury subpoena as part of a probe by the U.S. government into possible criminal violations of antitrust laws in the air cargo transportation industry.

The U.S. package delivery company said it does not believe it is a target of the investigation, which it said was being conducted by the antitrust division of the U.S. Department of Justice, and is cooperating with the investigators.

FedEx disclosed the subpoena in a Form 10-K filed with the U.S. Securities and Exchange Commission.

The investigation appears to be part of global probe of airlines suspected of fixing cargo prices that began in February, when the European Union's executive arm and the U.S. Justice Department raided a number of airlines on both sides of the Atlantic. Other carriers have been asked for information.

FedEx's rival United Parcel Service Inc. (UPS.N: Quote, Profile, Research) has already said it was contacted by U.S. authorities about the investigation, but said it was not part of the probe.

Other airlines drawn into the widening investigation include Air France-KLM (AIRF.PA: Quote, Profile, Research), British Airways Plc (BAY.L: Quote, Profile, Research), Deutsche Lufthansa AG (LHAG.DE: Quote, Profile, Research), Scandinavian airline SAS (SAS.ST: Quote, Profile, Research), Luxembourg-based Cargolux [CLUX.UL] and Air Canada's parent ACE Aviation Holdings Inc. (ACEb.TO: Quote, Profile, Research) (ACErv.TO: Quote, Profile, Research).

At issue are the surcharges that airlines have imposed for fuel; added security since the Sept. 11, 2001, hijackings in the United States; and higher war risk insurance, according to some of the carriers being questioned.

Fuel costs for airlines rose to nearly $100 billion last year from $44 billion in 2003, according to the International Air Transport Association (IATA), prompting many airlines to impose surcharges on fares.

Insurance industry sources said the cost of war risk insurance on cargo was a fraction of that covering passenger operations, and tiny relative to fuel costs.



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