OFT Fines British Airways for Price Fixing

Competition policy and law is an area of economic regulation that I favor for the reason that fostering competition between firms has obvious advantages for consumers of services. The prevalence and extent of cartel behavior and collusion between firms is sometimes difficult to accurately determine. This is because the ability to undercut co-conspirators in a collusive arrangement is a highly likely event. So the ability of the rest to retaliate is critical in keeping a collusive agreement going.

The BBC news reports here that the Office of Fair Trading levied a fine of up to £121.5m on British Airways following its admission to having colluded to fix fuel surcharge with Virgin Atlantic. I see this as very poor economic reasoning and enforcement of competition policy because Virgin was granted absolute immunity for reporting the collusion. The motivations of Virgin in seeking to collude notwithstanding, the outcome does not make any sense as Virgin registers a financial advantage over its competitor while appearing as the more virtuous firm. The equally guilty tale-teller is pampered.