U.K. fines British Airways ?121.5 million for price-fixing

U.K. fines British Airways ú121.5 million for price-fixing British Airways has been fined a record '121.5 million ($247 million) by the United Kingdom’s Office of Fair Trading after admitting to price-fixing passenger fuel surcharges, and faces another penalty from the U.S. Justice Department later today, which will also take into account its involvement in a similar probe into cargo fuel surcharges.
   The airline admitted that from August 2004 to January 2006, it colluded on at least six occasions with Virgin Atlantic over the surcharges. During that period, surcharges rose from '5 ($10.16) to '60 ($121.99) per ticket for a typical long-haul return flight.
   Virgin, having blown the whistle, is not expected to face any fines as it had full immunity under OFT’s leniency policy.
   “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 behavior,” said OFT Chairman Philip Collins.
   OFT is still conducting a criminal investigation into whether any individuals dishonestly fixed the levels of the surcharges, and said no conclusions have been reached as to whether criminal proceedings against individuals can or should be brought.
   In October 2006 two British Airways executives, Martin George, commercial director, and Iain Burns, head of communications, quit the company after being on leave of absence since June when the investigations started.
   The airline later said it has set aside '350 million ($711.6 million) to cover the potential fines and legal costs. The company was facing a fine of up to 10 percent of its global revenue, which amounted to '8.5 billion ($17.3 billion) in its last fiscal year. The fine doled out by the OFT represents slightly more than 1 percent of its turnover.
   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 anticompetitive conduct by a very limited number of individuals within British Airways. Anticompetitive behavior is entirely unacceptable and we condemn it unreservedly. 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.”