UK: UK OFT Reduces BA Fuel Surcharge Fine To £ 58.5 Million

On 19 April 2012, the UK's Office of Fair Trading (OFT) announced its decision to fine British Airways (BA) £ 58.5 million (around € 71 million) for anti-competitive practices relating to the setting of fuel surcharges on long-haul passenger flights to and from the UK, in violation of the Chapter I prohibition of the Competition Act 1998 (the UK equivalent to Article 101 TFEU).

The decision follows the OFT's earlier finding that, between August 2004 and January 2006, BA and Virgin Atlantic Airways (VAA) coordinated their surcharge pricing policies on these long-haul flights and exchanged related commercially sensitive information. In August 2007, the OFT and BA initially agreed on a record penalty of £ 121.5 million in the context of an early resolution agreement (see VBB on Competition Law, Volume 2007, No. 9, available at www.vbb.com). This took into account reductions granted to BA under the OFT's leniency policy, as well as other reductions reflecting BA's cooperation with the OFT. VAA, for its part, benefited from total immunity from fines as it had brought the violation to the OFT's attention.

In parallel, separate criminal proceedings were also begun by the OFT against four current and former BA executives for alleged commission of the cartel offence under the Enterprise Act 2002 (see VBB on Competition Law, Volume 2008, No. 8, available at www.vbb.com). These criminal proceedings, however, subsequently collapsed at trial and the individuals concerned were acquitted (see VBB on Competition Law, Volume 2010, No. 5, available at www.vbb.com).

Following the discontinuance of the OFT's criminal prosecution, the OFT issued a Statement of Objections in November 2011 outlining its proposed infringement decision under the Competition Act. After the Statement of Objections, and in the light of BA's cooperation and of the Competition Appeal Tribunal's recent case law on the calculation of penalties, the OFT finally decided to reassess BA's fine and to reduce it to £ 58.5 million.

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