KN reserves $32m to settle US competition probe

Kuehne + Nagel (KN) has set aside Sfr35m (US$32m) to settle its part in competition investigations in the US, as part of its 2009 results published this week.

Thierry Held, head of finance for north-west Europe, said the Swiss forwarder believed it was close to a final settlement with the US Department of Justice – which launched an investigation, alongside other competition authorities, in October 2007 into collusion in the global freight forwarding sector.

The company said the provision, to include legal expenses, comprised Sfr10m for its sea freight business and Sfr25m for its air freight division.

“I think this amount is much lower than some analysts in the market may have expected, so this is positive rather than negative news,” said Held.

Tim Scharwath, president for north-west Europe, said KN expected to settle the matter in the US before the end of the second quarter, although he was unable to say whether a similar settlement in Europe was likely.

“We only received the Statement of Objections from the European Commission three weeks ago, and that is a document of 3,000 to 5,000 pages, so it is too soon to say anything about that,” he said.

The EC issued documents outlining areas where it believed competition law had been breached to several global forwarding companies, understood to also include DHL Global Forwarding, Panalpina, Schenker, Expeditors, UTi, DSV (for activities relating to ABX) and Ceva (for activities relating to EGL).

Last month, DHL Global Forwarding said it had been granted immunity from prosecution and fines by the EC, conditional upon continuing co-operation – effectively admitting that it was information from DHL that sparked the investigation.

It said: “DHL Global Forwarding co-operation began after the company became aware, during the course of an internal investigation, that activities potentially raising concerns under the competition laws may have occurred.”

A DHL spokesman told IFW the EC investigation – as it related to DHL – focused on four surchargesand their application within its air freight activities: the New Export System surcharge, a pre-clearance system for UK exports outside the EEA; the Advanced Manifest Systems surcharge, regarding cargo shipments to the US; the Currency Adjustment Factor, regarding exports out of China; and the Peak Season Surcharge, a temporary rate adjustment applied to shipments out of several Asian countries to the EEA or the US. (source: ifw)

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