The Office of Fair Trading (OFT) announced on 19 April 2012 that British Airways (BA) would be fined £58.5m for its involvement in a cartel to fix fuel surcharge pricing on long-haul passenger flights to and from the UK between August 2004 and January 2006. During this period, BA co-ordinated fuel surcharge pricing with Virgin Atlantic Airways (VAA) through the exchange of pricing and other commercially sensitive information in response to rising oil prices.
The OFT’s original investigation into the cartel started in June 2006 when the regulator announced that it was conducting an investigation in relation to possible breaches of the Chapter I prohibition of the Competition Act 1998 and Article 101 of the Treaty of the Functioning of the European Union. In August 2007, the OFT announced that BA had admitted colluding with VAA during the relevant period and had agreed to pay a fine of £121.5m, which took into account a reduction under the OFT’s leniency policy and an additional reduction for further cooperation with the OFT during its investigation. The OFT stated that the fine would not be payable by BA until the OFT issued its final decision. VAA, as the whistleblower, received full immunity from fines under the OFT’s leniency policy.
The final decision was delayed by the announcement by the OFT in August 2008 that it had charged four current or former executives of BA with cartel offences under the Enterprise Act 2002. It was alleged that the executives had dishonestly agreed with others to make or implement arrangements which directly or indirectly fixed the prices for the supply in the UK of passenger air transport services by BA and VAA. However, in May 2010 the OFT announced that it had decided to withdraw proceedings against the BA executives.
Following the issue of a Statement of Objections in November 2011, the original fine of £121.5m was reassessed in the light of a number of factors including legal developments regarding penalty setting for competition law infringements and the fact that the overall value added to the OFT’s investigation by BA’s co-operation was greater than had been anticipated at the time of the original fine.
Ali Nikpay, the OFT Senior Director of Cartels and Criminal Enforcement, said that “the decision sends out a strong message that co-ordinating pricing through the exchange of confidential information between competitors is unlawful. The size of the fine underlines that it is important for companies to take steps to ensure that they have an effective compliance culture.” He added that the fine would have been higher still but for the co-operation provided by BA throughout the OFT’s investigation, without which the case would have taken considerably longer to resolve.