WIREDGOV

The Office of Fair Trading has issued a statement of objections alleging that Cathay Pacific Airways and Virgin Atlantic have infringed competition law in relation to passenger services on the London to Hong Kong route.

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.

The matter was brought to the OFT's attention by Cathay Pacific under the OFT's leniency policy, where a company which is the first to report its participation in cartel conduct may qualify for immunity from penalties. Provided it continues to cooperate, Cathay will be immune from any penalty imposed in this case.

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.'

At this stage it should not be assumed that the parties involved have broken the law. The OFT will decide if the law has been breached after it has reviewed any responses to the statement of objections.  

NOTES

1. The Competition Act 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK. The Chapter I prohibition covers anti-competitive agreements and concerted practices that have the object or effect of preventing, restricting or distorting competition in the UK or a part of it and which may affect trade in the UK or a part of it. Its European counterpart, Article 101 of the TFEU, covers equivalent agreements or practices which affect trade between EU Member States.
   
   
2. A statement of objections gives notice of a proposed infringement decision under the Competition Act 1998 to the parties involved. It sets out the facts on which the OFT relies, the objections raised by the OFT, the action it proposes to take and the reasons for it. This document is not a decision document and the parties have the opportunity to make written and oral representations in response to the alleged case set out by the OFT. Such representations (if any) will be considered by the OFT before any final decision is made.
   
   
3. The statement of objections will not be published. In accordance with the OFT's guidance on Involving third parties in Competition Act investigations (pdf 289 kb), any person who wishes to comment on the OFT's proposed findings, and who is in a position materially to assist the OFT in testing its factual, legal or economic arguments, may request a non-confidential version of the statement of objections by contacting the OFT no later than 21st May 2010.
   
   
4. Under the OFT's leniency policy an undertaking may be granted immunity from penalties or a significant reduction in penalty in return for reporting certain categories of Competition Act infringement and assisting the OFT with its investigation. Cathay Pacific is expected to be granted immunity from penalties provided it continues to cooperate with the OFT as it informed the OFT of the infringement before the OFT had commenced its investigation.