British Airways, Virgin Atlantic Weren't in a Cartel, Defense Lawyer Says

British Airways Plc didn’t always tell Virgin Atlantic Airways Ltd. before raising fuel surcharges during a period of record oil prices, a defense lawyer said at a criminal price-fixing trial in London.

BA’s eight-pound increase ($12.15) on June 23, 2005, wasn’t discussed with Virgin and is proof the carriers had neither a consensus on prices nor a commitment to a cartel, lawyer Clare Montgomery told a jury today in Southwark Crown Court. Virgin later decided on its own to match the increase, she said.

“There was a genuine debate at Virgin about what independent decision they should make” to respond to BA’s increase, Montgomery told the jury. “There was no agreement to stop competing and fix surcharges.”

Three former BA executives and one current manager face claims by the U.K.’s antitrust regulator that they schemed with Virgin from July 2004 through April 2006 to keep surcharges as high as possible without losing customers.

Andrew Crawley, BA’s head of sales; Martin George, a former board member; Iain Burns, ex-head of communications; and Alan Burnett, former head of U.K. and Ireland sales, pleaded not guilty in July 2009.

The case, the first of its kind since criminal antitrust laws were enacted, was brought by the Office of Fair Trading and is being heard by Judge Robert Owen. The men each face as many as five years in prison if found guilty.

No Virgin employees were charged because the Crawley, England-based company admitted its role in the scheme and cooperated with authorities, prosecutors said. Montgomery, the defense lawyer, said Virgin admitted guilt to be cautious and wasn’t necessarily doing anything wrong.

Richard Branson

Prosecutors also claim that Virgin owner Richard Branson asked an executive to “sound out” a contact at rival BA over proposed changes to fuel surcharges, a prosecutor told a London court.

Virgin Chief Executive Stephen Ridgway and at least two other former Virgin executives were aware of the scheme and will be “important” witnesses in the case, Latham has said.

The OFT won its first convictions for members of a cartel in 2008, when three men were sentenced to as long as three years in jail for conspiring to fix the price of hoses used in the oil industry. The U.K. criminalized antitrust violations in 2002.

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net;

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