A competition law
specialist has said that the fines, the biggest ever imposed by the
Office of Fair Trading (OFT), signal that it is not enough for a
company simply to have a competition law policy.
"British Airways were fined before in the 1990s in relation to
competition law. They had a very strict approach to competition law
because of that," said Alan Davis, a competition law specialist
with Pinsent Masons, the law firm behind OUT-LAW.COM. "The shock is
that this happened to BA because they were a competition law
compliant company on the whole."
"It shows that it is not enough to have a competition law
policy, it can't just sit on the intranet," said Davis. "It has to
be read by everyone, and understood. There needs to be ongoing
training, and there must be support for it from management."
BA was found to have engaged in price fixing on fuel surcharges
added to ticket prices from 2004 onwards as fuel prices rose. BA
and Virgin were found to have co-operated on the amount and the
timing of surcharges.
Both companies now face the prospect of potentially massive
payouts in the US in class action lawsuits as flyers seek to recoup
what they overpaid. A suit has already been filed by one law
firm.
Class action suits do not exist in the UK in the same form.
Collective legal redress could be sought by a consumer body through
a consumer representative action in the Competition Appeals
Tribunal, said Davis. Any payouts won here, though, would be used
for the benefit of all consumers and would not go directly to those
who flew, though.
Another mechanism is the Group Litigation Order, but it is at
the discretion of the courts to group together similar existing law
suits, said Davis. "I don't think we would have individual
consumers seeking to go to the courts in the first place for the
sake of £30," he said.
Two former BA employees are under criminal investigation by the
OFT and the Serious Fraud Office and could face jail under a new
competition law that came into force in 2003. "They have to show
that they dishonestly fixed prices and that is a difficult
condition to satisfy, it is a subjective test," said Davis. "The
OFT hasn't had a conviction under the new law yet."
Virgin was not fined by either US or UK authorities because it
approached authorities first with evidence of the price fixing.
Though some observers have been surprised that the airline escaped
with no fines, Davis said that it such immunity is a normal part of
competition investigation policy.
"It is a policy that the UK and European Commission saw working
in the US. It has worked incredibly well. What successful
investigations there have been in recent years have used
whistle-blowers," he said.
The fines related to surcharges on seats on passenger aircraft
and also on cargo flights. The cargo investigation involves a
greater number of airlines, up to a dozen from around the
world.
