BA admits surcharge collusion in US court
Published 24/08/2007 | 07:56
British Airways has formally admitted in a US court that it colluded with its rivals to fix the price of fuel surcharges, opening the door to possible criminal prosecution of staff implicated in the scandal as well as civil litigation.
BA, along with Korean Air Lines, have been fined around £150m each by US authorities for their role in the price-fixing cartel, while the British company has also been fined over £120m by UK regulators.
A court sitting in Washington DC confirmed that the fine that had already been agreed with the US Department of Justice was appropriate. The airlines could have faced much stiffer penalties of up to £450m had they not co-operated with the authorities.
The court ruling ends the Department of Justice's criminal investigation into BA's conduct. However US regulators will continue to investigate the conduct of individuals. The names of staff implicated in the price-fixing scandal were not revealed in the court. However the Department of Justice could reveal the names of up to 10 current and ex-BA employees if it chooses to extradite individuals as part of its investigation into cargo surcharges. The employees may be jailed for up to 10 years if found guilty. UK authorities did not investigate price-fixing in the cargo market, opening the door for extradition to the US.
Martin George, BA's commercial director, and Iain Burns, communications director, both quit the airline earlier this year after a lengthy leave of absence.
The guilty plea also opens the door for a raft of class action lawsuits against the airline. Lawyers acting for plaintiffs in the US have attacked BA for "disingenuous" claims that the price fixing scandal had not led to customers being over-charged.
Virgin Atlantic has escaped financial punishment after blowing the whistle on the collusion over a period when fuel surcharges increased from £5 to £60.