Cathay and Virgin probed over air fare collusion

Britain's competition watchdog detailed allegations yesterday that Cathay Pacific Airways and Virgin Atlantic colluded over fare pricing.

In a formal "statement of objections" yesterday, the Office of Fair Trading said that employees of the two airlines allegedly exchanged commercially-sensitive information on pricing and other matters over a number of years.

The exchanges were aimed at coordinating pricing strategies on passenger fares on the London to Hong Kong route, the OFT said.

A statement of objections effectively puts a company on notice that the watchdog believes there has been an infringement of competition rules and gives it an opportunity to respond before a final decision is reached.

The OFT said it was alerted to the situation by Cathay, allowing the Asian airline to claim immunity from any penalties if it continues to cooperate with the regulator.

Ali Nikpay, senior director of Cartels and Criminal Enforcement, said it should not be assumed at this stage that the carriers have broken the law.

"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," said Nikpay.

"The parties will now have an opportunity to respond to our proposed findings before we decide whether competition law has in fact been infringed."

AP