Thursday, August 2, 2007
The Antitrust Division of the Department of Justice announced that British Airways and Korean Air entered guilty pleas for violating the Sherman Act for fixing prices for passenger tickets and freight charges. Each airline will pay a $300 million fine and cooperate in the government's continuing investigation. According to a DOJ press release (here):
The Department said that passengers who flew on British Airways flights between the United Kingdom and the United States during the charged period paid more for their tickets as a result of the illegal cartel. In 2004, British Airways’ fuel surcharge for round-trip passenger tickets was around $10 per ticket. By the time the passenger conspiracy was cracked in 2006, the surcharge was nearly $110 per ticket–a 10-fold increase, said the Department. The Department noted that during the air cargo conspiracy, British Airways’ fuel surcharge on shipments to and from the United States changed more than 20 times and increased from four cents per kilogram of cargo shipped to as high as 72 cents per kilogram.
The Department charged Korean Air with agreeing with air cargo competitors on rates charged to customers in the United States and elsewhere for international air cargo shipments. The Department noted that the conspirators agreed to increase the fuel surcharge over time from 10 cents per kilogram to as high as 60 cents for each kilogram of cargo shipped from the United States. The Department also charged that Korean Air reached an agreement with its rival to fix certain passenger fares for flights from the United States to Korea.
Two other airlines, Virgin Atlantic and Lufthansa, were admitted into the Antitrust Division's Corporate Leniency Program, which allows the first company to report violations to avoid criminal charges, but not civil damages, by cooperating in the investigation. (ph)