BA gets £121.5m price-fixing fine!

So they are all at it then…?!:eek::mad:

The Australian

Australian lawyers suing Qantas over allegations that it is part of a global price-fixing cartel believe the massive fines levied last week against two airlines bolster their $200 million class action against the airline.

Four airlines have now admitted their part in the cartel, and two — Qantas partner British Airways and Korean Air Lines — have been fined a total of $US850 million ($991 million) by regulators.

BA and Korean were each fined $US300 million as part of a plea agreement with the US Department of Justice over the price-fixing. BA also copped an additional fine of pound stg. 121.5 million ($289.4 million) from the British Office of Fair Trading.

Two other airlines, Lufthansa and Virgin Atlantic, escaped regulatory action by turning whistleblower against the other carriers.

Melbourne class action specialist Maurice Blackburn Cashman, which is suing Qantas and other airlines over the price-fixing, had known that Lufthansa was helping regulators, but the legal firm was surprised to find Virgin Atlantic had also sought regulatory amnesty.

The firm said yesterday it would use the latest developments to support its case.

“These guilty pleas will certainly be tendered as evidence against the airlines in the class action,” firm principal Kim Parker said yesterday.

“Air freight customers will now have even greater confidence in recovering the hundreds of millions of dollars spent on fuel and other surcharges over the last seven-year period in question.”

Maurice Blackburn Cashman is suing Qantas, BA, Japan Air Lines, Air New Zealand, Cathay Pacific, Singapore Airlines and Lufthansa over allegations that surcharges introduced in 2000 were illegally inflated.

It says these may include fuel, security and war-risk surcharges.

Ms Parker said the case would allege that the airlines followed an index originally set up by Lufthansa and used it as a mechanism to inform each other how and when the surcharges were to be imposed. She noted that Qantas had put out a target’s statement in February during the Airline Partners Australia takeover bid, admitting it was likely to have breached competition laws but had yet to say what the impact would be.

She said lawyers would be closely watching Qantas’s upcoming annual report for developments.

The Australian lawsuit is one of two that Qantas is facing: it has also been named in a US class action estimated to be worth $US1 billion.

The market had been expecting the British Airways fine after the airline said earlier this year it would make a pound stg. 350 million provision for the case. But there has been no indication yet of how much Qantas may lose.

Qantas chief executive Geoff Dixon last week told the National Aviation Press Club that the airline did not know where it stood in terms of liability.

“As you know, we had said there was a potential liability, but we’ve not been able to quantify it as yet and we’re still in discussions with a range of authorities on the issue,” he said.

The issue first came to light after Qantas was served by a DoJ subpoena in May last year requiring it to produce documents relating to its freight surcharges.

The airline subsequently admitted that practices adopted by Qantas Freight, and the cargo industry generally, were likely to have breached competition laws.

The February target’s statement said it would take at least 12 months to quantify “any direct or indirect liability associated with these matters”.

Several other regulators — including the Australian Competition & Consumer Commission — are also looking at the price-fixing allegations.

An ACCC spokeswoman said last week that the regulator was unable to automatically impose fines but had to mount a Federal Court case. She said the ACCC had been looking at the allegations and would mount its own investigation.

It was also unclear whether Qantas was one of several airlines the DoJ officials said it still had in its crosshairs.

The department’s statement on the BA-KAL fines indicated it was concerned mainly with price-fixing affecting US freight. The statement said both airlines participated in meetings, conversations and communications to discuss cargo rates on shipments to and from the US.

It said billions of dollars of consumer and other goods were shipped by BA and its rivals and that the airline had participated in the conspiracy between March 2002 and February 2006.

121.5 is the international VHF distress frequency. Of course it is millions of Hertz rather than millions of pounds 😀

You betcha ! Here are today’s ‘sports’ results…Branson 1-0 BA (1-1 agg)

And now for the weather….
🙂

Please excuse my ignorance. What did BA do to Virgin to upset them?

Well at least the authorities have a sense of humour….

£121.5m… did anyone else notice the irony??

TA

I didn’t. Can anyone please explain?

Adam

The story’s not over yet.

Since this was a joint investigation by the UK Department of Trade and the US Department of Justice, BA are now almost certain to be penalised by the US authorities as well.

Indeed your right Grey, as of last night the fine now stands at a staggering £270m, after the US Department of Justice added a further £148m fine onto the £121.5m that the OFT imposed on them.

http://news.bbc.co.uk/1/hi/business/6925397.stm

The article does state…

BA now faces the possibility of legal challenges by customers on both sides of the Atlantic who believe they lost money as a result of the collusion.

I assume these costs will also be on-top of the huge fine that they have to pay?

The thing I find most amazing is that when this hold thing came to light, BA denied any involvement/wrong-doing, then it came out with the statement some months on saying that they were putting aside £350m to cover any fine and legal costs…guilty conscience or what?!

Well at least the authorities have a sense of humour….

£121.5m… did anyone else notice the irony??

TA

Would it not be rather more just if, instead of being made to paying millions of pounds and millions of dollars to various government departments on both sides of the Atlantic, BA was forced to trace all the passengers who had paid these inflated prices and repay them their excess fares.

This would surely punish them financially and also by imposing the probably expensive task of paying thousands of much smaller amounts to the affected passengers.

Before you ask, yes, my wife and I probably are two of the affected passengers.

Thats a sure fire way to put 15,000 to 25,000 people(however many BA employ currently) on the dole in short fashion

Would it not be rather more just if, instead of being made to paying millions of pounds and millions of dollars to various government departments on both sides of the Atlantic, BA was forced to trace all the passengers who had paid these inflated prices and repay them their excess fares.

This would surely punish them financially and also by imposing the probably expensive task of paying thousands of much smaller amounts to the affected passengers.

Before you ask, yes, my wife and I probably are two of the affected passengers.

The daft thing is you have not, apparently, been ripped off. There would have been a fuel surcharge anyway and it would almost certainly have been the same amount you paid. It was, in effect, a victimless crime. However, BA broke the competition rules which is a heinous crime in the eyes of the government and will have to pay an enormous fine that will be recovered, you’ve guessed it, by putting up fares. 😡

Price-fixing fine

Would it not be rather more just if, instead of being made to paying millions of pounds and millions of dollars to various government departments on both sides of the Atlantic, BA was forced to trace all the passengers who had paid these inflated prices and repay them their excess fares.

This would surely punish them financially and also by imposing the probably expensive task of paying thousands of much smaller amounts to the affected passengers.

Before you ask, yes, my wife and I probably are two of the affected passengers.

BA deserve these fines, but to see BA punished and Virgin walk is absurd, this was not a trap by Virgin, they were in on this, the fact that they went to the authorities doesn’t alter the fact that they were partners in an illegal cartel, the fact they went to the authorities is grounds for [I]reducing[I] their fine, not to let them walk away unpunished. Pathetic:mad:

Just thought I’d mention that the anagram of British Airways is – ‘This is war by air’

The story’s not over yet.

Since this was a joint investigation by the UK Department of Trade and the US Department of Justice, BA are now almost certain to be penalised by the US authorities as well.

As the Klingons say, revenge is a dish best served cold. Come to think of it, Sir Richard does look rather like a Klingon…. 😎

Virgin’s ground handling is done by Plane Handling (at LHR)

I think there was stupidity on the part of people from both airlines. The difference seems to be that at some point someone within Virgin was sensible enough to go to the authorities, and that was lucky for them in the outcome of the investigation.

What annoys me is that the BA people involved were not sacked they were paid-off handsomely. Can you imagine if I cost BA £350m?

Doesn’t BA provide VS all their ground handling at LHR?

No, not the case.

1L.

Was it a trap? I’m sure I read that the now dismissed BA employees responsible approached Virgin and not the other way round. That being said I wouldn’t be surprised if Branson’s boys went along with it knowing they would shop them later.

Still feel a bit sorry for BA however. It is a whopping fine with another to come. The major beneficiary is the treasury who, as it happens, sets the air passenger duty which is designed as a revenue raising exercise in much the same way the airlines add fuel surcharges. And would the fine be so big if it was being applied to Virgin? Doubt it.

Could this be Virgin’s revenge for BA’s ‘Dirty Tricks’ campaign…?

You betcha ! Here are today’s ‘sports’ results…Branson 1-0 BA (1-1 agg)

And now for the weather….
🙂

Although any kind of price fixing is to be frowned upon, deliberately luring someone into a trap like this is despicable.

I have a feeling VS will pay for it in the long run.

Doesn’t BA provide VS all their ground handling at LHR?