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Thu, Aug 02, 2007 - Page 10 News List

UK fair trade office slaps record fine on British Airways

UNFAIR PLAY The firm admitted that between August 2004 and January last year it colluded with rival Virgin Atlantic over surcharges added to fares

AP, LONDON

A British regulator yesterday fined British Airways PLC (BA) ?121.5 million (US$246 million) after the airline admitted colluding with a rival over surcharges on long-haul flights.

BA said it accepted the fine from the Office of Fair Trading and expected to be hit with another penalty from the US Department of Justice later in the day.

The airline said the combined sum was likely to be consistent with the ?350 million it set aside in May to pay for any possible penalties resulting from an investigation into price-fixing allegations.

In a statement, the company said that it had admitted that between August 2004 and January last year it colluded with rival Virgin Atlantic over the surcharges, which were added to fares in response to rising oil prices.

Virgin Atlantic is not expected to face a fine because it reported the alleged misconduct to the Office of Fair Trading.

BA chief executive Willie Walsh said that passengers had not been overcharged, while acknowledging that a "limited number of individuals" at the company had broken rules of fair competition.

"Anticompetitive behavior is entirely unacceptable and we condemn it unreservedly," he said.

Authorities in Britain and the US have been investigating allegations of price-fixing on fuel surcharges since June last year.

A criminal investigation into the allegations continues.

Over that time, fuel surcharges have risen from about ?5 to about ?60 per ticket for a return long-haul flight on BA or Virgin.

Office of Fair Trading chairman Philip Collins said the fine -- the largest ever imposed by Britain's competition watchdog -- "will 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 behavior."

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