BA pays record fine for price fixing

British Airways is admitting collusion over the price of fuel surcharges for long-haul flights and will pay a penalty of £121.5 million ($246 million) to be imposed by the UK’s Office of Fair Trading (OFT).The penalty is the highest ever imposed by the OFT for infringements of competition law.

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.

Virgin Atlantic is not expected to pay any penalty as it qualifies in principle for full immunity under the OFT’s leniency policy. Under this policy, a company which has been involved in cartel conduct and which is the first to give full details about it to the OFT will qualify for immunity from penalties in relation to that conduct. In addition, any company staff involved in the price fixing disclosed will qualify for immunity from criminal prosecution in relation to that conduct. The OFT’s investigation was prompted after Virgin Atlantic came forward with information about price fixing with BA over the surcharges. British Airways has also provided full co-operation with the OFT’s investigation under the leniency programme and this is reflected in the penalty announced.

British Airways accepts the OFT’s finding 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.