U.S. News

British Airways fuel price-fixing trial collapses

JANE WARDELL|AP Business Writer

The trial of a quartet of former and current British Airways executives over alleged fuel price-fixing with Virgin Atlantic Airways collapsed on Monday after the late discovery of e-mails potentially undermining the case against the four men.

Lawyers for the Office of Fair Trading told a London court that they would offer no evidence, effectively dropping the case, because the e-mails found last week would have an "appreciable impact" on the evidence of the Virgin executive who was the key prosecution witness.

BA had already been fined a total of around $550 million by British and U.S. authorities for colluding on fuel surcharges between August 2004 and January 2006, but Virgin and its executives were granted immunity after bringing the matter to the attention of the OFT.

The OFT's lawyer, Richard Latham, said that the agency found 70,000 e-mails last week that had not been disclosed to the defense teams for the four men, including around 12,000 sent or received by Moore.

One e-mail dated March 21, 2005, suggested that Virgin decided to make one increase to its fuel surcharge — to 6 pounds instead of 5 pounds — before speaking to anyone from BA.

The trial judge ordered the OFT on Friday to disclose all the documents by Monday, a task the prosecution team found to be logistically impossible, Latham said.

"We have been driven to accept that it would be wholly unsatisfactory to call Mr. Moore today or in the immediate future," he told Southwark Crown Court.

The collapse of the case, only the OFT's second over alleged price-fixing as it attempted to crack down on cartel activities in big business, is an embarrassment for the agency, although it stressed it would not affect a separate civil case.

The watchdog suggested, however, that Virgin Atlantic may lose its immunity for that case, which concerns the conduct of the companies, rather than any alleged dishonesty of individuals.

Virgin Atlantic said it denied "any suggestion we have not complied with our obligations as an immunity applicant."

"At no point did Virgin Atlantic withhold evidence," it said in a statement. "We believe therefore there is no grounds for immunity to be withdrawn."

BA said it was delighted that the four men had been acquitted of the charges. It noted it had apologized many times for the "inappropriate contacts that took place between individual British Airways employees and counterparts at Virgin Atlantic."

"However, it remains our view that consumers did not suffer as a consequence of these contacts," it added.

"Given what has emerged during the trial about deficiencies in the information the OFT obtained from Virgin Atlantic, it has now become clear that the prosecutions should not have been brought," said BA.

The OFT began investigating BA, alongside the U.S. Department of Justice, after Virgin blew the whistle in 2006. George and Burns resigned shortly after, while Burnett retired the same year. All four were charged in August 2008.

Fuel surcharges, which are added on to standard ticket prices, were introduced to cover rising fuel costs. Between 2004 and 2006, the surcharges rose from about 5 pounds ($10) to about 60 pounds ($120) per ticket for a round-trip long-haul flight on BA or Virgin.

A settlement for passengers was reached in a U.S. District Court, requiring BA and Virgin to refund up to 73.5 million pounds ($142 million) to customers in Britain and up to $59 million to those in the United States.