Virgin Atlantic faces price-fixing probe by OFT

Published on Thursday 22 April 2010 20:50

SIR Richard Branson's Virgin Atlantic airline is facing an Office of Fair Trading (OFT) investigation into alleged price-fixing on flights between London and Hong Kong.

Cathay Pacific, Hong Kong's dominant carrier, alerted the watchdog under the OFT's leniency policy, whereby a company that reports taking part in cartel activities may qualify for immunity from penalties.

The OFT said employees of the two airlines had allegedly exchanged commercially sensitive information on pricing and other matters over a number of years. Those exchanges were aimed at co-ordinating pricing strategies on passenger fares on the London-Hong Kong route.

The OFT said it had issued a "statement of objections" alleging that the two airlines had infringed competition law on flights.

Ali Nikpay, the OFT's senior director of cartels and criminal enforcement, said: "The parties will how have an opportunity to respond to our proposed findings before we decide whether competition law has in fact been infringed."

Provided it continues to co-operate, Cathay will be immune from any penalty imposed in this case, the OFT said.

Nikpay added : "For a market economy to work effectively, it is vital that competing companies determine their pricing strategies independently of each other and do not seek to avoid the rigours of competition through unlawful co-ordination."

A statement of objections gives notice of a proposed infringement decision to the parties involved. It sets out the facts on which the OFT relies, the objections raised by the OFT, the action it proposes to take and the reasons for it.

The statement-of-objections document is not a decision document and the parties have the opportunity to make written and oral representations in response to the alleged case set out by the OFT.

A Virgin spokeswoman 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."

She added: "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."