British Airways fined $546 million for collusion
LONDON - British Airways P.L.C. was fined almost $550 million yesterday by U.S. and British regulators after the airline admitted colluding with rival Virgin Atlantic Airways Ltd. over fuel surcharges.
LONDON - British Airways P.L.C. was fined almost $550 million yesterday by U.S. and British regulators after the airline admitted colluding with rival Virgin Atlantic Airways Ltd. over fuel surcharges.
British Airways was fined $246 million by Britain's Office of Fair Trading and $300 million by the U.S. Department of Justice after parallel transatlantic investigations.
The Justice Department also fined Korean Air Lines Co. Ltd. $300 million for colluding with competitors to fix fuel surcharges on cargo shipments to the United States and fixing some passenger fares from the United States to Korea.
It said Korean Air Lines and British Airways had agreed to plead guilty in the United States to price fixing.
Deputy Assistant Attorney General Scott D. Hammond said the airlines' actions affected "virtually every American business and consumer" because U.S. companies relied on competitive shipping rates to export their goods to foreign markets and consumers did the same for the imported goods they purchased.
In Britain, British Airways admitted collusion, ending the Office of Fair Trading's civil investigation. A probe continues into whether any individuals committed criminal acts.
In addition, U.S. officials said British Airways and Korean Air Lines conspired with the German carrier Lufthansa AG to fix charges on international cargo shipments.
The Justice Department said Virgin Atlantic and Lufthansa would not face sanctions because they had come forward to authorities.
British Airways said it accepted the penalties. In May, it set aside $710 million to pay for possible fines as a result of the investigations.
In a statement, British Airways admitted that between August 2004 and January 2006, it had colluded - that is, held talks - with Virgin Atlantic over the surcharges, which were added to fares in response to rising oil prices. Under the Office of Fair Trading's leniency policy, Virgin Atlantic is not expected to face a fine because it reported the alleged misconduct to authorities.
British Airways chief executive officer Willie Walsh said that anticompetitive behavior was unacceptable and that the airline condemned it. However, he said that his firm had not added a higher charge than it otherwise would have done.
"I want to reassure our passengers that they were not overcharged. Fuel surcharges are a legitimate way of recovering costs," he said. "However, this does not in any way excuse the anticompetitive conduct by a very limited number of individuals within British Airways."
