OFT halves BA's record fine for price-fixing

The record £121.5m fine slapped on British Airways for colluding with Virgin Atlantic to fix prices was more than halved yesterday, when the Office of Fair Trading finally brought a dramatic five-year investigation to a close.

The OFT said it had cut its fine down to £58.5m due to recent case law in calculating fines and in light of BA's co-operation with investigators since 2007, when the flag-bearer first admitted colluding with Virgin over fuel surcharges on long-haul flights between August 2004 and January 2006. Virgin, which tipped off the OFT about the price-fixing, escaped without punishment.

The case saw the OFT launch criminal lawsuits against a number of former BA executives, but the trial collapsed just three weeks into a planned six-month legal battle after prosecutors failed to disclose key documents to the defence, including 70,000 documents from Virgin's computer database.

A later official review found that "management oversight" and "weakness in investigation processes" caused the collapse of the case, at a cost to the taxpayer of £1m.

Today the OFT claimed the fine had sent a "strong message" on price fixing to the aviation industry.

Ali Nikpay, the OFT's senior director of cartels and criminal enforcement, said: "The size of the fine underlines that it is important for companies to take steps to ensure that they have an effective compliance culture."

The case sparked the long-running feud between Virgin's founder, Sir Richard Branson, and Willie Walsh, then the chief executive of BA but now the boss of the airline's owner, International Airlines Group.

In January, Mr Walsh said of Sir Richard: "I wouldn't forgive anybody for what they did there." Asked if he did not like the entrepreneur, he responded: "I've made no secret of the fact. I don't think he likes me either."

Just yesterday, Mr Walsh launched another attack on Sir Richard, branding his opinions "irrelevant" and saying he had no admiration for him.

A spokesman for BA said yesterday it was "pleased that this matter has been settled".

A Virgin spokesman said: "VAA regrets its involvement in this matter but is pleased that a final determination has been reached. VAA reported this matter to the OFT in 2006 and has retained fully immunity since then."