BA chiefs could face jail for surcharges
Aug 8 2008 By Andrew Mernin
FOUR past and present British Airways executives face the possibility of up to five years in jail after trading chiefs yesterday brought price-fixing charges against them.
The Office of Fair Trading charges refer to fuel surcharges from July 2004 to April 2006.
The four, who include head of sales Andrew Crawley, will appear before City of London magistrates on September 24.
The OFT said the four, including former commercial director Martin George, were charged with “having dishonestly agreed with others to make or implement arrangements which directly or indirectly fixed the price for the supply in the UK of passenger air transport services by British Airways and Virgin Atlantic Airways”.
The others are former communications head Iain Burns and former UK and Ireland sales chief Alan Burnett.
The charges are brought under the Enterprise Act 2002. Under section 188 it is an offence dishonestly to agree businesses will engage in certain cartel activity, namely price-fixing, limiting supply or production, market-sharing and bid-rigging. Those convicted may face five years’ jail and an unlimited fine.
UK and US authorities have fined BA £270m for the surcharges.
In 2006, George and Burns resigned and Burnett retired. The four are among 10 past and present BA staff refused immunity in a plea deal between the airline and the US Department of Justice. Virgin got immunity after alerting the OFT.
Last February, BA and Virgin settled a US class-action lawsuit, which a plaintiffs’ representative said could see the two pay more than £100m to passengers.
BA says 11 million passengers, including seven million in the UK, were affected.
A spokesman for Burns said he had had no responsibility for
pricing and had co-operated with the OFT.
Competition law expert Angelo Basu, from Ward Hadaway, said the case was further evidence of the OFT’s determination to clamp down on alleged anti-competitive practices which hit consumers.
Mr Basu, who has more than 10 years’ experience in competition law, said: “Prevention of harm to consumers is one of the key drivers for competition policy in the UK and the OFT has already shown it is prepared to go a long way to crack down on such practices.
“Earlier in the year, the OFT had its first criminal prosecutions for price fixing where three men were sent to prison for between two and a half and three years each after pleading guilty to price fixing in the marine hoses market.
“The BA fuel surcharges case is much bigger and more high profile with a clear impact on consumers. It is likely the OFT will want to pursue the case strongly to build on the precedent of the convictions and sentences earlier in the year.”
