Cathay Pacific and Virgin Atlantic under scrutiny for cartelisation
23 April 2010
The UK regulator has launched an investigation into alleged price fixing by Cathay Pacific Airways and Virgin Atlantic on flights between London and Hong Kong that may see Sir Richard Branson ending up paying up to £40 million fine if found guilty.
The UK Office of Fair Trading (OFT) yesterday issued a statement of objections alleging that Cathay and Virgin Atlantic have infringed competition law by colluding for four years over pricing strategies on their London to Hong Kong routes.
The OFT said in a statement, ''The case concerns a number of alleged contacts between employees of the two airlines over a number of years which it is alleged had the object of coordinating the parties' respective pricing strategies regarding passenger fares through the exchange of commercially sensitive information on pricing and other commercial matters.''
Hong Kong-based Cathay Pacific will be immune from any penalties since it was the first to report its involvement in the cartel and is cooperating with the OFT in its investigation, but Virgin may end up paying 2 per cent of its £2 billion turnover or £40 million if found guilty.
Ali Nikpay, senior director of Cartels and Criminal Enforcement said, ''For a market economy to work effectively it is vital that competing companies determine their pricing strategies independently of each other and do not seek to avoid the rigours of competition through unlawful coordination.''
''The parties will now have an opportunity to respond to our proposed findings before we decide whether competition law has in fact been infringed,'' he added.