Price-Fixing British Airways Set for Wave of Compensation Claims

LONDON — British Airways is facing the threat of a wave of passenger compensation claims after being fined about $540 million yesterday for price-fixing by regulators on both sides of the Atlantic.The Office of Fair Trading fine of about $246 million was the biggest in the organization’s history.It was imposed for BA’s “collusion” with Virgin Atlantic over fuel surcharges.Just hours later, it was announced by the Department for Justice in Washington that BA had been fined about $300 million after pleading guilty to being involved in conspiracies to fix the prices of passenger and cargo flights.BA has put aside more than $160 million to meet potential compensation claims arising out of the judgment.The OFT expects consumers to seek redress from BA lawyers.The consumer watchdog Which? is still considering whether to act on behalf of individual passengers.It has powers to do so after the OFT ruling of uncompetitive behavior.Currently, Which? is representing about 130 consumers in an action against JJB sportswear chain over price fixing of football shirts.If it acted on behalf of passengers, it would take a case to the competition appeals tribunal.But BA could be more vulnerable if any of its major corporate clients seek refund of the surcharges they paid during the investigation.Details of the trans-Atlantic investigations emerged in June 2006 when BA’s offices were raided.Inquiries centered on the movement of fuel surcharges with BA and Virgin appearing to move in step from when they were first introduced in May 2004.BA introduced a $5 surcharge on May 13, and Virgin did the same thing six days later. By April 2006, both airlines were charging $70 extra on a long-haul flight.The investigation centered on conversations between BA and Virgin during that period.Virgin Atlantic, who blew the whistle on what was going on, will not be fined having been granted immunity by the OFT.Virgin said: “We informed regulators as soon as our legal team was made aware of the nature of the contacts that had occurred between some individuals at British Airways and Virgin Atlantic.“We take complying with competition laws extremely seriously and regret that contacts were made between the two companies.“As a criminal investigation is continuing, we are unable to give further details until the regulators publish their full findings.”Virgin co-operated with the transatlantic inquiry along with two American carriers — American and United.But Virgin could also face the possibility of civil action from passengers who paid the surcharges — even though it was not fined, says the OFT.Two senior BA figures — commercial director Martin George and communications director Iain Burns — went on gardening leave in the immediate aftermath of the investigation.They left the airline several months later.The OFT is still investigation allegations of criminal behavior by individual executives.It has declined to name those who are still under scrutiny.BA’s chief executive Willie Walsh is seeking to distance himself from the affair.He described it as “anti-competitive conduct by a very limited number of individuals within British Airways.”He added: “Anti-competitive behavior is entirely unacceptable and we condemn it unreservedly.”

Price-Fixing British Airways Set for Wave of Compensation Claims

Price-Fixing British Airways Set for Wave of Compensation Claims

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