1st Aug 2007 15:59
British Airways PLC01 August 2007 DOJ COMPETITION INVESTIGATION RESOLVED British Airways confirmed today (August 1) that it has entered into a pleaagreement with the United States Department of Justice (DoJ) on fines relatingto anti-competitive activity in the company's longhaul passenger and cargobusinesses. Under the terms of the agreements, British Airways has agreed to pay a fine of$300 million (£145 million) to the DoJ for infringements of competition laws,which comprises $100 million for passenger fuel surcharges and $200 million forcargo. The sum of the combined fine is consistent with British Airways' guidanceand provision of £350 million. Earlier today the airline announced it had resolved an investigation by the UKOffice of Fair Trading (OFT) into longhaul passenger fuel surcharges. The DoJ's investigation into longhaul passenger fuel surcharges was separate butconducted in parallel with the OFT investigation. British Airways chief executive Willie Walsh, said: "Fuel surcharges are alegitimate way of recovering costs and when set independently do not breachcompetition law. I want to reassure our passengers that they have not beenovercharged. "However this does not in any way excuse the anti-competitive conduct. Thisbehaviour is entirely unacceptable and we condemn it unreservedly. "We have a long standing competition compliance policy which requires all staffto comply with the law at all times. I am satisfied that we have the rightcontrols in place. However, it is deeply regrettable that some individualsignored our policy." This brings to an end the investigations by the DoJ and OFT into BritishAirways. The DoJ and the OFT continue with their criminal investigations into the conductof individuals. Ends August 1, 2007 080/KG/07 Note to editors: The detailed analysis of the fines will be made public by the DOJ in due course. Under US law criminal fines for Sherman Act infringements cannot exceed a sum,which is the greater of: • $100 million • twice the pecuniary gain derived from the violation • twice the pecuniary loss suffered by consumers. On passenger fuel surcharges the DoJ agreed that the fine should be capped at$100 million. On cargo, under US Sentencing Guidelines, which take 20 per cent of revenue as astarting point adjusted after taking into account various factors includingBritish Airways' early and substantial co-operation, the fine was agreed of $200million. Under IAS 37, the airline made a provision of £350 million for settlement of thecompetition investigations in its 2006/7 accounts. The provision in respect of competition investigations relates topotential Government fines in the following jurisdictions in relation to cargofuel surcharges: USA, Europe, Australia, Canada, New Zealand and South Africaand, in relation to long haul passenger fuel surcharges: USA and the UK. It alsorelates to civil claims in the USA, Australia and Canada. Under IAS 37 theprovision represents the estimate of the amount to settle competition authorityand civil claims at the Balance Sheet date, but recognises that the final amountrequired to pay all claims and fines is subject to uncertainty. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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