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BA gets £121.5m price-fixing fine BA gets £121.5m price-fixing fine
(20 minutes later)
British Airways has been fined £121.5m after it admitted price-fixing of fuel surcharges on long-haul flights. British Airways has been fined a record £121.5m by the Office of Fair Trading (OFT) after it admitted colluding to fix the prices of fuel surcharges.
BA colluded with Virgin Atlantic over the surcharges, which were added in response to rising oil prices, the Office of Fair Trading (OFT) said. BA held illegal talks with rival Virgin Atlantic over the charges, which were added to passenger fares in response to rising oil prices.
Virgin Atlantic has been given immunity after it reported BA's activity and is not expected to be fined, the OFT said. But Virgin has been given immunity after it reported the collusion and is not expected to be fined, the OFT said.
BA is also expected to face a fine from the US Department of Justice (DoJ) later on Wednesday. BA will also face a fine from the US Department of Justice (DoJ) later.
The OFT and the DoJ began investigating BA's price-fixing in June 2006.
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 Q&A: BA price-fixing probe Check BA's share priceAnti-competitive behaviour is entirely unacceptable and we condemn it unreservedly Willie Walsh, BA chairman Q&A: BA price-fixing probe Check BA's share price
The OFT 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. The OFT and the DoJ began investigating BA's price-fixing in June 2006.
And the airline said in May that it had set aside £350m to cover fines and the costs of legal action.
The fines will ends 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.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.
'Important message''Important message'
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 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.
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 PestonBBC Business Editor Read Robert Peston's blogIt makes for quite rough justice, since - on BA's account - Virgin was a willing participant in this shameful attempt to rig the market Robert PestonBBC Business Editor Read Robert Peston's blog
BA's chief executive Willie Walsh said that passengers had not been overcharged because fuel surcharges were "a legitimate way of recovering costs".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.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. "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."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.""I am satisfied that we have the right controls in place. However, it is deeply regrettable that some individuals ignored our policy."
'Blatant breach''Blatant breach'
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". OFT chairman Phillip 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.
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.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.
This serves to remind companies of the substantial risks involved if they are found to engage in such behaviour Phillip CollinsChairman, OFTThis serves to remind companies of the substantial risks involved if they are found to engage in such behaviour Phillip CollinsChairman, OFT
"We take complying with competition laws extremely seriously and regret that contacts were made between the two companies," it said."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.""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".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.""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."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."