2nd UPDATE: UK Alleges Cathay, Virgin Colluded On Airfares
April 22 2010 - 11:17AM
Dow Jones News
The U.K.'s Office of Fair Trading Thursday issued a statement of
objections alleging that Cathay Pacific Airways Ltd. (0293.HK) and
Virgin Atlantic colluded to set airfares on the London to Hong Kong
route in breach of competition law.
In a statement, the OFT alleged that through contacts between
employees over a number of years, the two companies coordinated
strategies on passenger fares through the exchange of commercially
sensitive information on pricing and other commercial matters.
The route between the U.K. and Hong Kong is one of the busiest
long-haul routes in the world.
The OFT said the matter was brought to its attention by Cathay
Pacific under the OFT's leniency policy, where a company that is
the first to report its participation in cartel conduct may qualify
for immunity from penalties.
Provided it continues to cooperate, the Hong Kong carrier will
be immune from any penalty imposed in this case, the OFT added.
"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 rigors of
competition through unlawful coordination," said Ali Nikpay, the
OFT's senior director of cartels and criminal enforcement. "The
parties will now have an opportunity to respond to our proposed
findings before we decide whether competition law has in fact been
infringed."
Virgin Atlantic vigorously denied the allegations.
"Virgin Atlantic intends to robustly defend itself against these
allegations," which allegedly occurred between 2002 and 2006, it
said in a statement. "The airline does not believe that it has
acted in any way contrary to the interests of consumers."
It added that it was important to note that no definitive
findings have been made against Virgin Atlantic by the OFT at this
time. No decision on any potential infringement has or will be made
by the OFT until Virgin Atlantic has an opportunity to formally
respond, the airline said.
Cathay Pacific said it "has a policy of full compliance on
competition law issues and will fully cooperate with any
authorities if required to."
Virgin Atlantic in the past has acted as a whistle blower in
alleged cartel activity. In 2007, it escaped a fine from regulators
for colluding with competitors to fix the prices on certain flights
between the U.S. and the U.K. In that case, British Airways PLC
(BAY.LN) was fined about GBP269 million. Both companies faced
claims under class-action lawsuits.
-By Jonathan Buck, Dow Jones Newswires; +44 (0)207 842 9237;
jonathan.buck@dowjones.com
Cathay Pacific Airways (PK) (USOTC:CPCAY)
Historical Stock Chart
From Jun 2024 to Jul 2024
Cathay Pacific Airways (PK) (USOTC:CPCAY)
Historical Stock Chart
From Jul 2023 to Jul 2024