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Last Updated: Wednesday, 1 August 2007, 23:17 GMT 00:17 UK
BA's price-fix fine reaches 270m
BA plane at Heathrow
BA has admitted that the actions of some staff were unacceptable
British Airways has been fined about 270m after it admitted collusion in fixing the prices of fuel surcharges.

The US Department of Justice has fined it $300m (148m) for colluding on how much extra to charge on passenger and cargo flights, to cover fuel costs.

It followed a decision by the UK's Office of Fair Trading to fine BA 121.5m, after it held illegal talks with rival Virgin Atlantic.

Surcharges were added to passenger fares in response to rising oil prices.

Virgin has been given immunity after it reported the collusion and is not expected to be fined, the OFT said.

BA now faces the possibility of legal challenges by customers on both sides of the Atlantic who believe they lost money as a result of the collusion.

The BBC's Adam Brookes in Washington said the airline could face multiple lawsuits for damages in the US from aggrieved passengers.

Record fines

The OFT and the DoJ began investigating BA's price-fixing in June 2006.

It makes for quite rough justice, since - on BA's account - Virgin was a willing participant in this shameful attempt to rig the market
Robert Peston
BBC Business Editor

BA, which made a 611m profit last year, revealed in May that it had set aside 350m to cover fines and the costs of legal action.

It is the first time that the UK and the US have simultaneously brought action against a company.

The DoJ said that the fine to BA - and another given to Korean Airlines - was the second-largest dispensed by the department to date.

The fines will end the civil case against BA, but a criminal investigation is still continuing, and the OFT said no conclusions could be drawn about whether charges against individuals would be brought.

Last October, BA's commercial director, Martin George, and communications chief, Iain Burns - who had been on leave of absence since the inquiry began - quit the company.

'Real impact'

BA had colluded with Virgin Atlantic on at least six occasions between August 2004 and January 2006, the OFT said. During that time, surcharges rose from 5 to 60 per ticket.

BA's chief executive Willie Walsh insisted that passengers had not been overcharged because fuel surcharges were "a legitimate way of recovering costs".

Anti-competitive behaviour is entirely unacceptable and we condemn it unreservedly
Willie Walsh, BA chief executive

However, he acknowledged that the conduct of some of the carrier's employees had been wrong and could not be excused.

"Anti-competitive behaviour is entirely unacceptable and we condemn it unreservedly," Mr Walsh said.

"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."

Scott Hammond of the DoJ's antitrust division said that "virtually every American business and consumer was impacted by these crimes".

"American companies rely on competitive shipping rates to export their goods to foreign markets, American consumers rely on imports for so many consumer and household goods, American families flew these airlines on international destinations.

"In every instance American businesses and consumers ended up paying more as a result of these crimes."

'Blatant breach'

OFT chairman Philip Collins said that the hefty fine would "send an important message" to companies and business leaders about its intention to enforce the law.

"This serves to remind companies of the substantial risks involved if they are found to engage in such behaviour," he said.

This serves to remind companies of the substantial risks involved if they are found to engage in such behaviour
Philip Collins
Chairman, OFT

Virgin Atlantic said that it had informed the OFT as soon as its lawyers were made aware of the nature of contacts that had occurred between individuals from the two airlines.

"We take complying with competition laws extremely seriously and regret that contacts were made between the two companies," it said.

"As a criminal investigation is continuing, we are unable to give further details until the regulators publish their full findings."

BBC business editor Robert Peston said that the collusion between BA and Virgin Atlantic was "as blatant a breach of competition law as it's possible to imagine".

"This was not a careless accident. The two big birds... were not competing properly on price over an extended period: they were giving each other comfort that they would not undercut each other on the fuel surcharge."

He added: "Virgin won't pay a penny in fines and actually emerges as a winner, since all the opprobrium of the rule-breach has been heaped on BA."


Here is a selection of comments received by the BBC News website.

Willie Walsh states that customers were not overcharged, however, if the surcharges were fixed between Virgin and BA and not competitive then surely the customers must have lost out, they would have paid over the odds. What happens to the money from the fines? Will any customers be re-imbursed?
Andy Sharman, Peterborough

Sir Richard and the Virgin brand won over so many hearts when the details of British Airways` 'dirty tricks' campaign came to light in the early 90s. To me, if there were ever two businesses that wouldn`t have colluded in such a way - it would be these. Shame on you Virgin Atlantic.
Gareth Reid, Wellingborough, Northants

It is an outrage that Virgin are not being penalised in the same way and to the same extent. How can we know that they had not planned this all along, a real possibility given the history between the firms? It takes two to collude and with only BA being fined the message this sends is not constructive for any party or any industry. It sets a dangerous precedent. In no way do I condone the action taken by BA but I think that the fine is excessive - and why are they being fined twice? I would still fly with both companies and probably BA before Virgin.
Chris Cecil, Haddington, East Lothian

I flew BA in June 2006 to India and back. Did the price gouging affect me? If so, then 'B' for British should be replaced with another "B" that stands for illegitimate.
Robert Tavaris, Florida, USA

I have been flying the Atlantic for 50 years and I find the anti-competition laws a joke. The price of a trans-Atlantic ticket has not fallen in real terms since the IATA rules were suspended. All that has happened is that conveniences such as no-charge trip cancellation, free seat selection and inter-airline open-jaw bookings have been withdrawn.
Jim Garner, Ottawa, Canada




VIDEO AND AUDIO NEWS
BA chief executive Willie Walsh reacts to the fines




SEE ALSO
Q&A: BA price fixing investigation
01 Aug 07 |  Business
BA may face 350m collusion bill
18 May 07 |  Business
BA increases fuel surcharge again
08 Jun 07 |  Business
Profit fall for British Airways
02 Feb 07 |  Business
BA pair quit amid surcharge probe
09 Oct 06 |  Business

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