That's A Price Neither Will Be Able To Fix
Britain's largest airline and South Korea's national carrier
each received fines of $300 million Thursday, after admitting they
conspired to fix pricing on international flights.
As ANN reported, British
Airways PLC and Korean Air Co. pleaded guilty earlier this month to
antitrust conspiracy charges. The carriers admitted they teamed up
with rivals over cargo rates and fuel surcharges added to fares in
response to rising oil prices, thus increasing prices to passengers
and international shippers.
US District Judge John D. Bates said this case "involved
considerable commerce and reflected long-term and widespread
conduct involving major airlines and players," according to The
Both companies were rewarded with lesser fines because they
cooperated with the US Justice Department. Good thing, too.
Korean Air's fine could have been near $600 million while British
Airways' could have pushed $900 million, the AP reported.
"As a foreign corporation with headquarters outside the United
States, BA could have retained highly relevant documents in its
foreign offices and refused to cooperate," prosecutors wrote. "It
chose, however, to assist the United States early in its
investigation in a highly significant and useful way."
The fines levied were the second largest antitrust sanction by
the Justice Department since 1995. The largest, $500 million, was
given to F. Hoffman-La Roche in a 1999 price-fixing case.
British Airways said
between mid-2004 and early 2006, it conspired with Virgin Atlantic
over the surcharges... but Virgin Atlantic wasn't having any of
that and reported it to authorities. The airline isn't
named in the case, nor is it expected to be fined.
During the times the illegal activity was occurring, fuel
surcharges increased from about $10 to around $120 per ticket for a
round trip, long-haul flight on either carrier.
"(Thursday's) sentencing demonstrates that those who violate the
antitrust laws and seek to deny American consumers and businesses
the benefits of competition will be held accountable for their
actions," said Scott D. Hammond, Deputy Assistant Attorney General
for Criminal Enforcement of the Department's Antitrust
"The Antitrust Division is actively continuing its investigation
into the air transportation industry," Hammond added... meaning
more airlines may soon have to pay the piper.