OFT looks into airline price fixing allegations

The Office of Fair Trading (OFT) recently issued a statement of objections regarding the conduct of Cathay Pacific and Virgin Atlantic airlines.  The charge is that both companies may have been guilty of breaking the laws against price fixing, specifically on flights between London and Hong Kong.

Cathay Pacific brought the situation to the attention of the OFT under the protection of the leniency policy, which basically says that the first company to report its participation in wrongdoing will probably suffer no penalties. The allegation is that employees of both companies shared information in order to coordinate the airlines’ pricing strategies – in other words, cartel activity.   According to the allegations, this practice has been going on for years.

The intent of the OFT is to insure that companies act independently in their pricing and other commercial strategies, so that fair market trade is established and no monopoly can fix prices or standards to the detriment of smaller competitors.

A spokesperson from Virgin Atlantic said that the airline’s practices have never been contrary to consumer interests, and that they will defend themselves with vigour against any such allegation.  Ali Nikpay, a senior director at OFT, said that no decision has been made at present.  Both companies will be given the opportunity to respond to any findings and present their arguments before any final decision is announced.

It has been noted that in a previous case involving Cathay Pacific and British Airways,

Cathay avoided penalties under the same leniency law, with British Airways receiving a fine totalling £270m.