Virgin launches dollars 1bn action against BA in US: Anti-trust action may take five years

BRITISH Airways was last night facing a dollars 1bn legal action in the United States after Richard Branson's Virgin Atlantic began anti-trust proceedings over the dirty tricks campaign waged against it by its larger rival.

The action, filed in New York's southern district court, alleges that BA attempted to destroy Virgin and stifle competition on the north Atlantic by engaging in a variety of unfair and illegal activities.

Virgin, which won pounds 600,000 damages and a High Court apology from BA in January, is seeking damages of dollars 325m ( pounds 223m) in the US. However, if the court finds against BA this amount will be automatically tripled under American anti-trust law.

The US filing is likely to embroil BA in a further period of turbulence and uncertainty, with lawyers warning last night that the case could last up to five years.

It also means that the legal battle between BA and Virgin is now being fought on three fronts. Virgin has also launched High Court proceedings accusing BA of wrongfully accessing confidential computer information on Virgin passengers. In addition, there is a complaint with the European Commission alleging breaches of EC competition laws by British Airways.

Last night Mr Branson said: 'Airing another airline's dirty linen in front of an American audience is not something I would normally choose to do. However, in the UK aviation business there is nothing to protect smaller carriers against anti-competitive monopolistic behaviour.'

The US filing contains a battery of allegations against BA, accusing it of monopolising air routes across the Atlantic through its dominant position at Heathrow, its tie-up with the US carrier USAir, and its use of dirty tricks.

In a statement Virgin said BA had 'engaged in a variety of activities to impede Virgin's growth and to attempt to destroy it with targeted predatory and anti-competitive acts and practices'.

Specifically, Virgin accused BA of:

Manipulating travel agents and corporate business accounts.

Prejudicial use of its slots at Heathrow.

Selling Concorde tickets at below cost in competition with Virgin services.

Refusing to accept properly endorsed Virgin tickets on its services.

Poaching Virgin passengers and conducting a smear campaign against the airline.

In addition to the damages, Virgin is seeking an injunction to prevent BA from continuing the alleged activities.

The wave of legal action follows the failure of the two airlines to resolve their dispute amicably. Peace talks earlier this year, brokered by the Civil Aviation Authority, fell apart after BA refused to pay Virgin pounds 9m in damages.

Virgin said it had arrived at the dollars 325m figure by assessing the damage it had suffered over the past four years, adding that it believed the claim to be a 'fair and reasonable amount'.

BA has 60 days to respond to the anti-trust filing after which the judge in the New York court will conduct an initial hearing.

Last night BA said it could not comment in detail since its lawyers were still in the process of obtaining a copy of the writ, but the airline

is expected to defend the action vigorously.

The news came too late to affect BA shares in London, which closed unchanged at 386p.