BA price-fixing trial collapses after discovery of new evidence

Virgin Atlantic denied withholding evidence from a price-fixing trial of airline executives, which collapsed yesterday amid bitter recriminations.

In a deeply embarrassing move, the Office of Fair Trading (OFT) halted its prosecution of four British Airways managers following the discovery of 70,000 previously undisclosed but potentially relevant emails, many sent by a key prosecution witness – Virgin Atlantic's director of corporate affairs Paul Moore.

While acknowledging its role in the blunder, the OFT indicated that information in the emails would not necessarily have led to the abandonment of its prosecution, which it insisted was justified. It said it would review whether to take action against Virgin Atlantic, the airline founded by Sir Richard Branson, in its search for justice for victims of price-fixing.

Airline passengers are estimated to have paid £35m over the odds in fuel surcharges because BA and Virgin Atlantic colluded on prices between August 2004 and January 2006.

BA was fined £148m by the US Justice Department and £121.5m by the OFT, but Virgin Atlantic escaped any penalty because it blew the whistle on BA and co-operated in a criminal case brought against four BA executives.

Yesterday the four men – Andrew Crawley, BA's sales and marketing director; Martin George, a former commercial director; Iain Burns, a former head of communications; and Alan Burnett, a former head of UK sales – were found not guilty by a jury at Southwark Crown Court. They had faced prison terms if convicted.

On Friday, the trial judge, Mr Justice Owen, complained that important emails dating back to 2005 were missing, including one from May 2005 which showed that Virgin Atlantic had raised its surcharge from £5 to £6 without contacting BA, indicating that the collusion was not as far-reaching as the OFT claimed.

Yesterday, Richard Latham, QC, prosecuting for the OFT, said 70,000 emails were found last week which had not been disclosed, some 12,000 of which were sent or received by Mr Moore. The OFT duly offered no evidence against the four, who walked free from court without a stain on their characters. Their lawyers accused the OFT of bringing an unnecessary case.

The acquittal was a significant embarrassment for the OFT, which had spent four years and millions of pounds on the investigation. However, the watchdog issued a statement that was partly apologetic and partly defiant. It said: "In the early stages of the investigation, electronic material was provided to the OFT by Virgin Atlantic pursuant to its obligation as a leniency applicant to provide the OFT with continuous and complete cooperation.

"The omission from this material of a significant number of emails only came to light after the start of the trial. Had the omission been uncovered earlier, the OFT believes there is every prospect that the trial would have been able to proceed. The OFT acknowledges responsibility for its part in this oversight, which occurred at a time when the UK criminal cartel regime was still relatively new.

"The OFT will also be reviewing the role played by Virgin Atlantic and its advisers in light of the airline's obligations to provide the OFT with continuous and complete co-operation. This may have potential consequences for Virgin's immunity from penalties."

In a statement, Virgin Atlantic maintained that it had "fully assisted" the OFT throughout the investigation and denied suggestions that it had not complied with its obligations as an immunity applicant.

"At no point did Virgin Atlantic withhold evidence," the airline said. "The OFT decided the scope of the forensic IT review which was carried out, and the disclosure process was agreed with the OFT at every step."

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