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  • Surcharge shyster's fined

    British Airways has been fined £121.5m after it admitted price fixing of fuel surcharges on long-haul flights. BA colluded with Virgin Atlantic over the surcharges, which were added in response to rising oil prices, the Office of Fair Trading (OFT) said.

    The OFT and the US Department of Justice (DoJ) have been investigating the allegations since June last year. The airline said in May that it had set aside £350m to cover fines and the costs of legal action.

    Anti-competitive behaviour is entirely unacceptable and we condemn it unreservedly

    Willie Walsh, BA chairman

    The DoJ will announce how much it plans to fine BA later on Wednesday.

    Virgin Atlantic has been given immunity after it reported BA's activity and is not expected to be fined, the OFT said.

    The fine ends the civil case, 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 probe began - quit the company.

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

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

    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," he 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."

    OFT chairman Phillip Collins said that the hefty fine would "send an important message to corporate boards and business leaders about our intention to enforce the law, and serves to remind companies of the substantial risks involved if they are found to engage in such behaviour".

  • #2
    Oooooh, BA's in trouble!
    Such a way about you, My Singapore Girl. Wouldn't go away without you, My Singapore Girl.

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    • #3
      Watch this space! The US DoJ fine is expected to be announced later today - estimated to be around £200m.

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      • #4
        http://news.bbc.co.uk/1/hi/business/6925397.stm

        BA's price-fix fine reaches £270m

        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.

        ...
        All opinions shared are my own, and are not necessarily those of my employer or any other organisation of which I'm affiliated to.

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        • #5
          i still think it's a little bit of a bum-deal that they stick it to BA and Virgin gets off scot-free just because they admitted to it first. doesn't really set a good precedent- a company can collude with another and reap the benefits of price-fixing, but then roll over on their price-fixing partner and keep all of the money they stole over the years by means of their "partnership."

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          • #6
            I'm taipeiflyer that VS should not go scot-free. Whistle blowing should not result in immunity.

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            • #7
              Korean Air is in hot soup too. This airline was mentioned, along with British Airways in a ChannelNews Asia report.
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              • #8
                tapei - what u say might be true but its crude business - BA admitted that if they knew that something like this was a possibilty, they woulda ratted VS out.

                Though VS has benefited immensely in the shorter game, it will be interesting to watch BA and VS relations from now
                _________________________________

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                • #9
                  At least Virgin Atlantic didn't get fined. That would have been irritating to Singapore Airlines.

                  There is the prospect of legal action, though I don't know how that will stand up considering everyone and his mother is charging surcharges.

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                  • #10
                    Originally posted by taipeiflyer View Post
                    i still think it's a little bit of a bum-deal that they stick it to BA and Virgin gets off scot-free just because they admitted to it first. doesn't really set a good precedent- a company can collude with another and reap the benefits of price-fixing, but then roll over on their price-fixing partner and keep all of the money they stole over the years by means of their "partnership."
                    I'm coming to the opposite conclusion. I think allowing the snitch to go scot-free creates a very powerful incentive not to honor any price-fixing agreement ... and therefore makes such agreements that much more unstable. It doesn't seem fair or right, but I think it's a good way to harness self-interest to undermine the incentive to engage in unlawful action.
                    ‘Lean into the sharp points’

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                    • #11
                      Originally posted by jjpb3 View Post
                      I'm coming to the opposite conclusion. I think allowing the snitch to go scot-free creates a very powerful incentive not to honor any price-fixing agreement ... and therefore makes such agreements that much more unstable. It doesn't seem fair or right, but I think it's a good way to harness self-interest to undermine the incentive to engage in unlawful action.

                      YesI agree morally it is wrong but it is a good way to put people off price fixing.

                      I just wish rather than these fines they just outlawed these rediculous surcharges. If the price of fuel goes up then put your ticket prices up.

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