Page last updated at 12:18 GMT, Thursday, 22 April 2010 13:18 UK

Virgin and Cathay face OFT price-fixing probe

Cathay Pacific planes
Cathay will be immune from any penalty under OFT rules

Rival airlines Virgin Atlantic and Cathay Pacific are being investigated by the Office of Fair Trading (OFT) over price-fixing allegations.

It is alleged that the two companies co-operated over pricing strategies on their London to Hong Kong routes, the OFT said.

If true, the airlines would be in breach of competition law.

Virgin Atlantic said it planned to "robustly defend itself" against the allegations.

Cathay Pacific will be immune from any penalties, however, as it brought the matter to the OFT's attention in the first place.

Under the OFT's leniency policy, companies involved in price fixing or other cartel activities can gain immunity by coming to the OFT first.

Chance to respond

It is alleged that employees at the two airlines were in contact with each other over a number of years and exchanged "commercially sensitive information" about the pricing of passenger fares.

Ali Nikpay, the OFT's senior director of cartels and criminal enforcement, said that Virgin Atlantic and Cathay Pacific would now have the chance to respond to the allegations before it was decided whether the law had been broken.

Virgin Atlantic said it did "not believe that it has acted in any way contrary to the interests of consumers" and intended to "robustly defend itself against these allegations".

It also pointed out that the allegations were historical, dating from 2002 to 2006.

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