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Cohen Millstein Hausfeld & Toll has reached a settlement in a US price fixing class action brought against British Airways (BA) and Virgin Atlantic. The agreement could see thousands of air passengers receive compensation from the airlines.
The £100m settlement, which will be formally announced later today (Friday), will mean that eight million customers who paid for a ticket between 11 August 2004 and 23 March 2006 will be entitled to claim compensation.
Of the £100m settlement, the firm said £73.5m would be allocated for paying claims brought by those who brought tickets in sterling. This is estimated to amount to the maximum of £10 per flight taken in the timeframe.
In August 2007, BA was fined £270m by the Office of Fair Trading and the US Department of Justice (DoJ) after it admitted breaking competition law and fixing air travel prices.
Cohen Milstein launched a class action lawsuit in the US courts against both airlines in June 2006 on behalf of air passengers who purchased tickets at an inflated price.
In a statement, British Airways’ chief executive Willie Walsh said: “As we have previously said, we absolutely condemn any anti-competitive activity by anybody. This settlement, which British Airways and Virgin Atlantic have jointly agreed with the lawyers for the plaintiffs, is fair and reasonable. BA can now move on and do what we do best - deliver excellent customer service.”
A Virgin Atlantic spokeswoman added in a statement: "Virgin Atlantic deeply regrets its involvement in this matter and believes the provisional settlement reached now draws a line under this episode. We quickly began settlement negotiations after the case involving passenger fuel surcharges came to light. Following court approval the refund process will be announced by an independent claims administrator in the coming months.
"Details of the settlement and the claims process will be published by the administrator and on our website in due course. Once the court has given its final approval, anticipated in a matter of months, the settlement process will go live."
The settlement follows Cohen Milstein’s decision to drop a similar class action suit against supermarkets and dairies that were found guilty of fixing the price of dairy products such as milk and butter in 2002 and 2003.
The firm intended to bring the class action suit in the UK, the first of its kind, but reversed the decision because of funding issues.
Anthony Maton, a dispute resolution partner in the firm's London office, told The Lawyer at the time: "Consumer class actions for small claims of £5 or £10 are not possible in the current climate, and being a class action law firm putting our hands up to this is saying something."