OFT concludes that there are no grounds for action in respect of Cathay Pacific/Virgin Atlantic information exchange

06 February 2013

Victoria Moorcroft

On 14 December, the Office of Fair Trading (OFT) announced that it had no grounds for action in relation to allegations of fixing of passenger fares by Cathay Pacific and Virgin Atlantic on routes between London and Hong Kong.

The OFT started an investigation into the allegations in November 2007 after Cathay Pacific applied for leniency. The OFT went as far as issuing a Statement of Objections (SO) in April 2010. However, after hearing representations from Virgin Atlantic, it decided to investigate the allegations further, eventually concluding that there were a number of factors which cast doubt on the reliability of evidence set out in the SO.

Interestingly, Virgin Atlantic did accept that contacts between Virgin Atlantic and Cathay Pacific employees took place. However, it denied that the contacts had been anti-competitive or that commercially sensitive information had been exchanged. The OFT cannot, under EU law, conclude that there has been no infringement, but did conclude that it had no grounds for action and has closed its case without penalties.

The time taken by the OFT to conclude that the evidence did not support an infringement decision demonstrates how difficult the distinction between legitimate and illegitimate information exchanges can be in an industry where competitors legitimately exchange information all the time. The European Commission similarly investigated the fixing of passenger fares with dawn raids taking place in 2008, but closed its file at the end of 2011 with no charges.

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