Cathay and Virgin accused of price fixing

22 Apr 2010 by BusinessTraveller

The OFT is investigating allegations of price fixing between Cathay Pacific and Virgin Atlantic on the London-Hong Kong route between 2002 and 2006, and it seems Cathay has blown the whistle on the pair’s collusion in the hope of leniency.

A statement of objections released by the OFT today alleges that “Cathay Pacific Airways and Virgin Atlantic have infringed competition law in relation to passenger services on the London to Hong Kong route”. 

It continues that the case concerns “a number of alleged contacts between employees of the two airlines over a number of years which it is alleged had the object of coordinating the parties' respective pricing strategies regarding passenger fares through the exchange of commercially sensitive information on pricing and other commercial matters”.

The OFT says that it was Cathay Pacific which brought the matter to its attention, under a “leniency policy” which means Cathay will be immune from any penalty provided it continues to co-operate, because it was the first to report its participation in cartel conduct.

In a separate case Virgin Atlantic was found guilty of conspiring to fix fuel surcharges with British Airways back in 2008, although then it was Virgin which brought the matter to the OFT's attention in return for conditional leniency. In response to the latest allegations Virgin said:

“Virgin Atlantic intends to robustly defend itself against these allegations dating from 2002-2006. The airline does not believe that it has acted in any way contrary to the interests of consumers. 

“It is important to note that no definitive findings have been made against Virgin Atlantic by the OFT at this time. No decision on any potential infringement has or will be made by the OFT until Virgin Atlantic has an opportunity to formally respond to these allegations."

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Report by Mark Caswell

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