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Airlines To Pay $300M Fine In Price Probe

Thu Aug 02, 2007 6:16 pm

WASHINGTON (Reuters) -- British Airways and Korean Air have agreed to plead guilty and pay separate $300 million criminal fines for their roles in conspiracies to fix the prices of passenger and cargo flights, the Justice Department said Wednesday.

UK authorities said earlier Wednesday that British Airways agreed to pay a separate £121.5 million ($247 million) price-fixing fine for discussing fuel surcharges with archrival Virgin Atlantic Airways.

Virgin Atlantic and Deutsche Lufthansa AG earlier agreed to cooperate under a leniency program that allows a company to voluntarily disclose its participation in an antitrust crime and avoid conviction and fines.

Virgin Atlantic and Lufthansa still must pay restitution to the U.S. victims of their conspiracies, the officials said.

The Korean Air conspiracy lasted between January 2000 and July 2006 while the one involving British Airways took place between March 2002 and February 2006, the officials said.

They said passengers who flew on British Airways flights between the United Kingdom and the United States paid more for their tickets as a result of the illegal cartel.

In 2004, British Airways' fuel surcharge for round-trip passenger tickets was around $10 per ticket. By the time the conspiracy ended in 2006, the surcharge was nearly $110 per ticket, the U.S. officials said.

Investigation continues

The officials left open the possibility that individual executives and other airlines could be charged later as the investigation continues.

BA Chief Executive Willie Walsh defended the fuel surcharge increases, which came as crude oil prices surged. "I want to reassure our passengers that they were not overcharged."

But Deputy Assistant Attorney General Scott Hammond rejected Walsh's contention, even though it was difficult to know exactly what the prices would have been without the conspiracy.

Hammond asked why a company would risk fines and possible jail time for executives to participate for a lengthy period in a conspiracy that had no effect. "I suggest that defies common sense," he told reporters.


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