LONDON, Aug.1: British Airways has been fined £121.5 million by the Office of Fair Trading (OFT) for illegally fixing fuel-surcharges levied on passengers booking long-haul flights with the airline.

According to a press release of the OFT issued here on Wednesday British Airways has admitted collusion over the price of ‘long-haul passenger fuel surcharges. The penalty will be the highest ever imposed by the OFT for infringements of competition law.

British Airways has admitted that between August 2004 and January 2006, it colluded with Virgin Atlantic over the surcharges which were added to ticket prices in response to rising oil prices. Over that period, the surcharges rose from £5 to £60 per ticket for a typical BA or Virgin Atlantic long-haul return flight.

Virgin Atlantic is not expected to pay any penalty as it qualifies in principle for full immunity under the OFT's leniency policy. Under this policy, a company which has been involved in cartel conduct and which is the first to give full details about it to the OFT will qualify for immunity from penalties in relation to that conduct.

British Airways has accepted the OFT’s finding that on at least six occasions the two companies discussed and/or informed each other about proposed changes to the level of the surcharges, rather than setting levels independently as required under clear and well-established competition law principles.

The OFT's investigation was conducted in parallel with a similar case brought by the United States Department of Justice (DoJ). The investigations by the OFT and DoJ were separate but the two agencies have consulted each other closely throughout.

The OFT's infringement decision against BA will be taken and published in due course. It will record the full findings in this case and the basis for the calculation of the penalty to be imposed on British Airways.

Fuel surcharges, when set independently, do not infringe competition law. Such surcharges were first introduced by each of BA and Virgin Airways in May 2004. The earliest evidence of collusion between the companies dates from August 2004.

The investigations by the OFT and the US Department of Justice centred on collusion between BA and Virgin Atlantic over the setting of fuel-surcharges in the past three years.

BA said the OFT and the Department of Justice in the US were continuing their respective criminal investigations into the conduct of certain individuals.

The airline suspended Martin George, its commercial director, and Iain Burns, head of communications, a year ago and both men later left the airline.