British Airways has agreed a resolution with the UK Office of Fair Trading (OFT) and entered into a plea agreement with the United States Department of Justice (DoJ) on fines relating to anti-competitive activity in…
British Airways has agreed a resolution with the UK Office of Fair Trading (OFT) and entered into a plea agreement with the United States Department of Justice (DoJ) on fines relating to anti-competitive activity in the company`s longhaul passenger and cargo businesses as the carrier announced.
Under the terms of the agreements, British Airways has agreed to pay a fine of £121.5 million to the OFT and a DoJ fine which will be announced by the DoJ early this afternoon. The sum of the combined fine is consistent with our guidance and provision of £350 million.
This resolves the OFT`s and the DoJ`s investigation of British Airways.
British Airways` chief executive, Willie Walsh said; “I want to reassure our passengers that they were not overcharged. Fuel surcharges are a legitimate way of recovering costs. However this does not in any way excuse the anti competitive conduct by a very limited number of individuals within British Airways.”
“Anti-competitive behaviour is entirely unacceptable and we condemn it unreservedly,” continued Walsh.
“We have a long standing competition compliance policy which requires all staff to comply with the law at all times. I am satisfied that we have the right controls in place. However, it is deeply regrettable that some individuals ignored our policy.”
The OFT`s investigation turned on conversations between individuals at Virgin Atlantic and British Airways` during which information was exchanged on proposed changes to their respective longhaul passenger fuel surcharges in response to fluctuating oil prices.
In 2006 Virgin Atlantic went to the OFT and revealed its part in these conversations.
As the first applicant under the terms of the OFT`s leniency policy, Virgin Atlantic qualified for conditional immunity and as a result has not been required to pay any penalty.
British Airways responded swiftly to the investigation co-operating fully with the OFT and the penalty has been reduced to reflect this.
Fines for breaches of UK competition law are calculated in accordance with the OFT`s Fining Guidelines, and may be up to 10 per cent of a company`s worldwide turnover. The fine based on these Guidelines, represents just over one per cent of British Airways` group turnover.
In parallel, the US plea agreement with the DOJ brings to an end their investigations of British Airways with respect to its long haul passenger and cargo businesses.
The OFT and DoJ continue with their criminal investigation into the conduct of individuals.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
