British pricing watchdog investigates Cathay, Virgin airlines

22nd April 2010, Comments 0 comments

British regulators said on Thursday they were investigating whether Cathay Pacific Airways and Virgin Atlantic had infringed pricing law over the lucrative London to Hong Kong route.

"At this stage, it should not be assumed that the parties involved have broken the law," the Office of Fair Trading said in a statement.

It noted that the matter had been brought to the OFT's attention by Cathay Pacific under the OFT's leniency policy.

Under this policy, a company which is the first to report its participation in possible cartel conduct may qualify for immunity from penalties.

"Provided it continues to cooperate, Cathay will be immune from any penalty imposed in this case," the OFT said.

"The case concerns a number of alleged contacts between employees of the two airlines over a number of years," it added.

Virgin strongly denied the allegations.

"Virgin Atlantic intends to robustly defend itself against these allegations dating from 2002-2006," it said in a statement. "The airline does not believe that it has acted in any way contrary to the interests of consumers."

It is alleged that the contacts "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."

Ali Nikpay, senior director of the OFT's Cartels and Criminal Enforcement unit 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."

© 2010 AFP

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