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BA fuel surcharge fine halved by OFT BA fuel surcharge fine halved by OFT
(about 9 hours later)
The Office of Fair Trading has more than halved a £121.5m fine levied against British Airways for colluding with Virgin Atlantic in a fuel surcharge scam. The Office of Fair Trading has halved a £121.5m fine levied against British Airways for colluding with Virgin Atlantic in a fuel surcharge scam.
The consumer watchdog reduced the fine to £58.5m to reflect new guidelines for financial sanctions and BA's co-operation with the inquiry. Virgin Atlantic escaped any penalty because it blew the whistle on the collusion over setting fuel surcharges between 2004 and 2006.The consumer watchdog reduced the fine to £58.5m to reflect new guidelines for financial sanctions and BA's co-operation with the inquiry. Virgin Atlantic escaped any penalty because it blew the whistle on the collusion over setting fuel surcharges between 2004 and 2006.
In a short statement BA said: "We are pleased that this matter, which concerned events between 2004 and 2006, has been settled."In a short statement BA said: "We are pleased that this matter, which concerned events between 2004 and 2006, has been settled."
The fine remains a record high for the OFT. The level of the fine remains a record for the OFT. A separate class action lawsuit led by the Hausfeld & Co law firm has raised £8m in passenger refunds from BA and £4m from BA, with the compensation deadline closing in December. A typical refund on a flight by a family of four is expected to be around £80.
Willie Walsh, the chief executive of BA's parent company, International Airlines Group, indicated last year that the company would contest the fine. He spoke after a criminal trial related to the case collapsed when it emerged during proceedings that Virgin Atlantic had discovered 70,000 fresh emails that would have had an "appreciable" impact on the evidence of a key witness.Willie Walsh, the chief executive of BA's parent company, International Airlines Group, indicated last year that the company would contest the fine. He spoke after a criminal trial related to the case collapsed when it emerged during proceedings that Virgin Atlantic had discovered 70,000 fresh emails that would have had an "appreciable" impact on the evidence of a key witness.
He said at the time: "We said we needed disclosure of the evidence before we could agree anything with them. But, given the way the criminal trial collapsed, we don't believe there are any grounds for that level of fine."He said at the time: "We said we needed disclosure of the evidence before we could agree anything with them. But, given the way the criminal trial collapsed, we don't believe there are any grounds for that level of fine."
Four current and former BA executives were acquitted: Andrew Crawley, BA's then head of sales and now commercial director; former commercial director Martin George; former head of media Iain Burns; and former head of UK and Ireland sales Alan Burnett. The case cost the taxpayer £1m and an internal OFT review found that the regulator should have seized the Virgin Atlantic emails at the beginning of the process rather than rely on the co-operation of Sir Richard Branson's airline.Four current and former BA executives were acquitted: Andrew Crawley, BA's then head of sales and now commercial director; former commercial director Martin George; former head of media Iain Burns; and former head of UK and Ireland sales Alan Burnett. The case cost the taxpayer £1m and an internal OFT review found that the regulator should have seized the Virgin Atlantic emails at the beginning of the process rather than rely on the co-operation of Sir Richard Branson's airline.
The OFT said in a statement on Thursday that its decision was entirely separate to the criminal case. Ali Nikpay, the OFT's senior director of cartels and criminal enforcement, said: "This decision brings an end to this investigation and sends out a strong message that co-ordinating pricing through the exchange of confidential information between competitors is unlawful … The fine would have been higher still but for the co-operation provided by BA throughout the OFT's investigation."The OFT said in a statement on Thursday that its decision was entirely separate to the criminal case. Ali Nikpay, the OFT's senior director of cartels and criminal enforcement, said: "This decision brings an end to this investigation and sends out a strong message that co-ordinating pricing through the exchange of confidential information between competitors is unlawful … The fine would have been higher still but for the co-operation provided by BA throughout the OFT's investigation."
BA has also paid a $100m fine, at the time worth around £50m, to the US department of justice for the price fixing, which occured on transatlantic routes. The OFT fine will not have a material impact on BA's or IAG's accounts because the airline has already booked a charge for it. BA has also paid a $100m fine, at the time worth around £50m, to the US department of justice for the price fixing, which occurred on transatlantic routes. The OFT fine will not have a material impact on BA's or IAG's accounts because the airline has already booked a charge for it.
The OFT said BA's co-operation in the case included providing telephone records and arranging interviews with staff.The OFT said BA's co-operation in the case included providing telephone records and arranging interviews with staff.