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British Airways, Korean Air plead
guilty of price-fixing
Agence France-Presse . Washington
British Airways and Korean Air Lines Co each have agreed to plead guilty and pay separate 300 million dollar criminal fines for conspiring to fix prices on passenger and cargo flights, the US Department of Justice said Wednesday.
British Airways separately was fined a record 121.5 million pounds ($246m) in Britain after admitting collusion over fuel surcharges on tickets, according to the British antitrust agency.
The US charges against the British and South-Korean based airline companies were filed Wednesday in the US District Court for the District of Columbia.
Their plea agreements are the first to arise from the antitrust division’s ongoing investigation into the air transportation industry, the department said.
Under the plea agreements, which are subject to the federal court approval, BA and Korean Air have agreed to cooperate with the ongoing investigation.
‘The Department of Justice is committed to vigorous antitrust enforcement and will continue to bring to justice those who fix prices and thereby deprive the American public of the benefits afforded by a truly competitive market,’ said Attorney General Alberto Gonzales.
‘International law enforcement cooperation is crucial in prosecuting global cartels such as these, and today’s enforcement actions represent the successful coordination between the United States and the UK’s Office of Fair Trading.’
The Justice Department said that passengers who flew on BA flights between Britain and the United States during the period in question paid a hefty premium for their tickets as a result of the illegal cartel.
In 2004, BA’s fuel surcharge for round-trip passenger tickets was around 10 dollars per ticket. By the time the price fixing was uncovered in 2006, the surcharge was nearly 110 dollars per ticket, a more than 10 folds increase, the department said.
For air cargo, BA’s fuel surcharge on shipments to and from the United States changed more than 20 times and increased from four cents per kilogramme of cargo shipped to as high as 72 cents per kilogramme.
The Justice Department charged Korean Air with agreeing with competitors on rates charged to customers in the United States and elsewhere for international cargo shipments.
It noted that the conspirators agreed to increase the fuel surcharge over time from 10 cents to as high as 60 cents for each kilogramme of cargo shipped from the United States.
In addition, the department charged that Korean Air reached an agreement with its rival to fix certain passenger fares for flights from the United States to South Korea.
Two other airlines — Virgin Atlantic of Britain and Lufthansa of Germany — have agreed to cooperate in the antitrust division’s ongoing investigations, the department said.
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