British Airways has admitted collusion with Virgin Atlantic over the price of long haul passenger fuel surcharges (surcharges) and will pay a penalty of ”121.5m ($246) to be imposed by the Office of Fair Trading (OFT). A criminal investigation is ongoing and no conclusions have been reached as to whether proceedings against individuals can or should be brought.
The US department of justice has come in with an even larger fine, $300m (”150m).
The penalty is the highest ever imposed by the OFT. Virgin Atlantic is not expected to pay any penalty as it qualifies in principle for full immunity under the OFT's leniency policy. US originating class actions against both airlines are expected.
In its last accounting period BA did make provision for possible fines setting aside ”350m.
OFT chairman, Philip Collins said: "This case, and the substantial penalty imposed, will send an important message to corporate boards and business leaders about our intention to enforce the law, and serves to remind companies of the substantial risks involved if they are found to engage in such behaviour. It also illustrates how the OFT's leniency programme enables companies to eliminate or reduce their exposure to penalties by taking prompt and effective action.”
British Airways has admitted that between August 2004 and January 2006, it colluded with Virgin Atlantic over the surcharges which were added to ticket prices in response to rising oil prices. Over that period, the surcharges rose from ”5 to ”60 per ticket for a typical BA or Virgin Atlantic long haul return flight.
BA has accepted that on that on at least six occasions the two companies discussed and/or informed each other about proposed changes to the level of the surcharges, rather than setting levels independently as required under clear and well-established competition law principles. Two senior members of the company, commercial director Martin George, and communications manager Iain Burns, subsequently resigned.