In its recent statement of objections ("SO") the Office of Fair Trading ("OFT") alleges that Cathay Pacific and Virgin Atlantic have participated in unlawful information exchanges in breach of the Chapter I prohibition of the Competition Act 1998. The SO concerns the alleged co-ordination of passenger fare prices on the London to Hong Kong route, in particular the exchange of commercially sensitive price and commercial information between employees at the respective airlines between 2002 and 2006.
Cathay Pacific was the first to come forward and apply for leniency under the OFT's leniency programme. It is therefore not expected to pay a penalty, provided it continues co-operating. Similarly its directors are expected to be immune from prosecution under the Enterprise Act 2002. Although the OFT's press release has not made any reference to criminal prosecutions, Virgin Atlantic staff could potentially be charged with cartel offences. As many will recall, four of British Airways' executives have been charged with cartel offences following the 2006 OFT civil investigation relating to passenger fuel surcharges, in which British Airways was fined £121.5 million after Virgin Atlantic "blew the whistle". Virgin escaped sanction in that case. The trial against the four British Airways' executives is continuing in Southwark Crown Court.
Both parties will now have the opportunity to make written and oral representations in response to the SO, which will be considered before the OFT makes its final decision.
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