OFT launches Virgin Atlantic price fixing probe

OFT launches Virgin Atlantic price fixing probe

Britain’s Virgin Atlantic airline is to face an Office of Fair Trading (OFT) investigation into allegations of price fixing on its London to Hong Kong route.

In a statement issued earlier today, the OFT outlined allegations the airline had colluded on the cost of passenger services on the route with rival Cathay Pacific over a number of years.

The matter was brought to the OFT’s attention by Cathay Pacific under the government body’s leniency policy, where a company which is the first to report its participation in cartel conduct may qualify for immunity from penalties.

Provided it continues to cooperate, Cathay will be immune from any penalty imposed in this case

Ali Nikpay, OFT senior director of cartels and criminal enforcement, said: “For a market economy to work effectively it is vital competing companies determine their pricing strategies independently of each other and do not seek to avoid the rigours of competition through unlawful coordination.

“The parties will now have an opportunity to respond to our proposed findings before we decide whether competition law has in fact been infringed.”

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The case concerns a number of alleged contacts between employees of the two airlines over a number of years which it is alleged had the object of coordinating the parties’ respective pricing strategies regarding passenger fares through the exchange of commercially sensitive information on pricing and other commercial matters.

“At this stage it should not be assumed that the parties involved have broken the law,” added Mr Nikpay.

“The OFT will decide if the law has been breached after it has reviewed any responses to the statement of objections.”

In a statement Virgin Atlantic denied the allegations, saying it planned a “robust defence”.

The transatlantic airline also pointed out the allegations were historic, dating to the period between 2002 and 2006.

“The airline does not believe it has acted in any way contrary to the interests of consumers,” concluded a statement.