OFT verdict sparks class action against BA

US law firm Cohen Milstein Hausfeld & Toll has kickstarted class actions in the US and the UK against British Airways (BA) and Virgin Atlantic for their roles in the price-fixing cartel.

The news comes as Slaughter and May, which was flown in to advise BA on the UK and US investigation into price-fixing allegations, saw its client hit by a fine of £270m yesterday (1 August).

The Office of Fair Trading (OFT) delivered a £121.5m fine while the US Department of Justice recommended a $300m (£148m) fine to BA for colluding with other airlines over cargo and long-haul surcharges.

Virgin Atlantic blew the whistle on conversations between senior figures at both airlines over the levies added to tickets to cover the rising cost of oil.

As a result of breaking the cartel, Virgin escaped any penalties but it does not mean that it is immune from the class action, which is expected to be worth in the region of £300m in damages.

Michael Hausfeld of Cohen Milstein, who is the co-lead counsel for both the US and international claimants, said the lawsuit would be filed on behalf of millions of passengers that may have overpaid for their flights.

BA admitted that between August 2004 and January 2006 it held seven phone conversations with its rival, followed soon after by separate announcements from the airlines unveiling matching changes in the surcharges.

During the inquiry into, Virgin, American Airlines and United Airlines were also subject to investigation.

It is understood that Slaughters competition partner Bertrand Louveaux led the competition team advising BA.

Louveaux was brought in at the beginning of last year to advise the airline when it was subject to a dawn raid by the European Commission over suspicions of price-fixing in its cargo business.

Sullivan & Cromwell is understood to be advising on US matters, as first reported in The Lawyer (23 February 2006).

At the time of the raid, Air France, Lufthansa, KLM, SAS and cargo specialist Cargolux confirmed that they had also been visited by Commission officials.

The investigation involved competition partners across the City. Allen & Overy, Freshfields Bruckhaus Deringer, Herbert Smith and Lovells are said to have been brought in by clients to act in the investigation.