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US: More Turbulence as BA Faces US Lawsuit Over Price-fixing Claims

by Richard WrayThe Guardian (UK)
June 26th, 2006

The turbulence surrounding British Airways, and allegations of its involvement in an alleged price-fixing cartel, strengthened over the weekend with news that a potentially expensive class action law suit has been filed in the US.

Law firm Cohen, Milstein, Hausfeld and Toll was already compiling a list of complainants in a similar case involving surcharges levied on cargo flights. Now it has filed suit against BA, Virgin Atlantic and other unnamed airlines for operating a "global conspiracy to fix, raise, maintain and/or stabilise prices for long-haul passenger flights to and from the UK".

News of the lawsuit - which, if successful, could see plaintiffs recoup three times their losses as compensation - came as it emerged that the FBI raided BA's New York offices on June 13, the same day as fellow investigators from the Office of Fair Trading entered the airline's Heathrow headquarters.

Last Thursday, BA shocked the City by admitting it is under investigation by the Department of Justice and the OFT over allegations that it has colluded in the fixing of fuel surcharges on long-haul flights.

The inquiry is understood to have followed a tip-off to the OFT by Virgin after Sir Richard Branson's airline was "sounded out" by BA about raising the levy. Virgin Atlantic is co-operating with the inquiry, which is likely to overshadow the release of its annual results today. These are expected to show an increase in profits and record passenger numbers.

BA has placed two of its executives - commercial director Martin George and head of communications Iain Burns - on leave of absence during the investigation.

American Airlines and United Airlines are both helping the investigation, though both have been at pains to stress they are not the focus of the inquiry.

The setting of fuel surcharges on cargo flights has been the subject of an investigation by the Department of Justice, the European Commission and regulators in Asia since February.

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