On 10 May 2010, the Office of Fair Trading (the "OFT") announced that it has dropped its criminal proceedings against four British Airways executives. The OFT had brought the proceedings for alleged dishonest price-fixing of fuel surcharges between British Airways and Virgin Atlantic Airways for long haul passenger flights to and from the UK. The maximum penalty for such charges is up to five years imprisonment and/or an unlimited criminal fine. All four BA executives have now been formally acquitted.
Following an application for immunity by Virgin under the OFT's leniency policy, the OFT opened parallel civil and criminal investigations into the alleged co-ordination of airline passenger fuel surcharges in 2006. Virgin's immunity application ensured that Virgin would not be fined in the civil case and that its executives were granted immunity from criminal prosecution. In contrast, four BA executives were charged with the criminal cartel offence and BA agreed to a fine of £121.5 million in relation to the OFT's civil case. However, the civil fine only becomes payable once the OFT has issued a final infringement decision, which was put on hold pending the outcome of the parallel criminal proceedings.
The OFT dropped its criminal case a few weeks into the trial after a significant number of potentially relevant documents were discovered by Virgin and its lawyers that 'neither the OFT nor the defence had previously been able to review'. Given the volume and content of the material, the OFT concluded that the continuation of the trial would be potentially unfair to the defendants.
Following the collapse of the criminal trial the OFT announced that it would revisit the initial immunity granted to Virgin while BA said that it would re-assess the settlement agreement in the civil case in the light of the new evidence.
It appears that the OFT relied heavily in its criminal investigation on Virgin and its lawyers to identify relevant documents for disclosure to the defence. The OFT acknowledged responsibility for its part in the 'oversight' but emphasised that staffing and procedural developments have taken place since the beginning of this criminal investigation to strengthen its handling of criminal proceedings going forward. However, it remains the case that the collapse of the OFT's criminal prosecution in the BA case amounts to a significant set-back of its efforts to deter cartels by the use of its criminal sanctions for cartel conduct. Its prosecution in the BA case was only its second ever criminal prosecution under the cartel offence provisions since the Enterprise Act 2002 came into force in June 2003 and was its first prosecution in which the defendants had pleaded 'not guilty'.
The OFT has stated that it will now review the role leniency applicants play in the identification and securing of evidence in cartel cases. This review may lead to more demanding levels of co-operation expected from leniency applicants in future civil and criminal cases. It may also lead to the OFT itself becoming more actively involved in the collection of evidence.
It appears that following the collapse of the OFT's criminal prosecution in the BA case, the only remaining OFT criminal cartel case is in relation to the automotive sector which, according to the OFT's website, remains at an early stage.
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