Virgin and Cathay Pacific: London to Hong Kong passenger route – Chapter I investigation
Office of Fair Trading (OFT) closed Competition Act 1998 case.
Investigation into alleged infringement of Chapter I and Article 101 in relation to passenger services on the London to Hong Kong route.
Case reference: CE/8882-07
Issue
Whether Cathay Pacific Airways ('Cathay') and Virgin Atlantic had infringed competition law in relation to passenger services on the London to Hong Kong route in the period 2002 to 2006.
Summary of work
- The case concerned a number of alleged contacts between senior employees of the two airlines over a number of years which it was alleged had the object of coordinating the parties' respective pricing strategies regarding passenger fares through the exchange of commercially sensitive information on pricing and other commercial matters.
- During its investigation the OFT gathered and conducted a thorough review of a significant body of evidence including documentary and witness material.
- The matter was brought to the OFT's attention by Cathay under the OFT's leniency policy, which provides that a company which is the first to report its participation in cartel conduct may qualify for immunity from penalties.
- In April 2010 the OFT issued a Statement of Objections giving the parties notice of its reasons for believing an infringement of the competition laws had taken place and inviting the parties' representations on the alleged case.
- The OFT received representations from the parties, including written representations from Virgin Atlantic in November 2010 and oral representations from Virgin Atlantic in February 2011. Virgin Atlantic provided additional witness and other evidence in support of its representations.
- In its representations Virgin Atlantic accepted that there had been contacts between the Virgin Atlantic and Cathay employees in question but disputed the allegation that the contacts had been anti-competitive and, in particular, that commercially sensitive information had been exchanged during them.
- Following the receipt of representations and additional evidence from Virgin Atlantic, the OFT took a number of additional investigative steps between March 2011 and September 2012. These included including seeking further witness evidence and obtaining additional data from Cathay and third parties, with a view to assessing the strength of those representations.
- Having completed these additional investigative steps the OFT concluded in December 2012 that there were a number of factors that cast doubt on the reliability of the evidence in support of the allegations as set out in the Statement of Objections. Most importantly, certain key documentary evidence which appeared to support the allegations had been undermined by inconsistencies with other evidence obtained from Cathay, Virgin Atlantic and third parties.
- In the circumstances, the OFT concluded that, following a thorough investigation, it had no grounds for action in relation to the allegations set out in the Statement of Objections and therefore decided to close its case.
Case timetable
| Milestone | Date |
|---|---|
| Investigation opened | November 2007 |
| Initial investigation: information gathering, including formal inspections, interviews of key witnesses, issuance of formal or informal information requests and parties' responses to requests. | November 2007 to June 2009 |
| Further investigation: further information gathering including further interview of key witness and review of evidence. | July 2009 - March 2010 |
| Investigation outcome (issue of Statement of Objections; case closure) | Statement of Objections issued in April 2010 |
| Receipt of parties' written representations on the Statement of Objections | October and November 2010 |
| Oral hearings with parties on written representations on Statement of Objections. | February 2011 |
| OFT consideration of parties' written and oral representations on the Statement of Objections; further investigation; further assessment of evidence. | November 2010 to October 2012 |
| OFT decision to close the case. | December 2012 |
Related documents
- press release OFT Issues no grounds for action decision in Hong Kong passenger services case (14 December 2012)
- press release OFT issues statement of objections against Cathay Pacific Airways and Virgin Atlantic (22 April 2010)