Airline price-fixing investigation under way

22 June 2006
More legal news

23 June 2006 | Rebecca Ellinor

Travel buyers may be entitled to a rebate if British Airways and other airlines are found guilty of alleged price-fixing over fuel surcharges.

The Office of Fair Trading (OFT) is conducting a criminal and a civil investigation into the alleged "price co-ordination by airlines in relation to fuel surcharges for long-haul passenger flights to and from the UK".

The OFT has confirmed that BA is among the airlines being scrutinised but will not say which others are involved. Virgin Atlantic has confirmed it is assisting with the investigation.

Paul Tilstone, executive director of the Institute of Travel Management, said he couldn't pass any judgment until the outcome of the investigation was known.

However, he added: "From a buyer's perspective, if the outcome is not favourable for British Airways and other airlines - if they have been found to be overcharging buyers - will there be any recourse that can be worked out between buyers and the airlines?"

With many companies using between 10,000 and 15,000 flights a year at an average cost of £350 a flight, he said, any rebate would "not be an insignificant amount of money".

If BA is found guilty of breaching competition law it could be fined up to 10 per cent of its annual turnover of £8.5 billion. BA faces an unlimited fine and those responsible could be given a five-year jail term if found guilty in the criminal investigation.

The US Department of Justice is also probing allegations of cartel activity. The OFT said the two are separate investigations but that they are in touch.

BA said it is assisting both organisations and that its policy is to "conduct its business in full compliance with all applicable competition laws".

The OFT said it was too early to determine if competition law had been broken: "No assumption should be made that there has been an infringement of competition law. The OFT will not be in a position to conclude whether the law has in fact been infringed until it has completed its investigations and assessed the available evidence."

It raided BA's offices on 13 June to collect documentation and BA yesterday announced that commercial director Martin George and head of communications Iain Burns have been given leave of absence during the enquiries.

The OFT is carrying out the civil investigation under the Competition Act 1998 and Article 81 of the EC Treaty. The criminal investigation is being done under the Enterprise Act 2002.





SMjun2006

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