More Details on the OFT's Botched Prosecution of British Airways

Cite this Article
Joshua D. Wright, More Details on the OFT's Botched Prosecution of British Airways, Truth on the Market (May 12, 2010),

Here (HT: Danny Sokol).   The post by Andreas Stephan implies that the OFT’s mistakes in the BA prosecution threaten to undermine the effectiveness of cartel enforcement in the UK generally and predicts that the OFT will not bring more criminal prosecutions in the near future.   Stephan also provides some more detail on what apparently went wrong:

The remarkable failure by OFT prosecutors to disclose key documents to the defence, betrays their inexperience in criminal proceedings and suggests a complacent overreliance on the whistleblowing party, Virgin Atlantic, in building their case. Virgin’s lawyers were apparently given the responsibility of uncovering evidence, but failed to produce some key documents to the OFT until the trial had started, having previously indicated the files were corrupted… .

As previously noted on the CCP blog, pursuing the BA case showed poor judgement by the OFT. The alleged conduct here was never a sophisticated hardcore cartel, but rather informal contacts between businessmen. The case thus hinged on emails and telephone calls largely produced as a result of Virgin’s cooperation with the regulator. When Virgin’s lawyers eventually produced the additional email evidence, including one communication suggesting a rise in fuel surcharges occurred before any communication took place between the airlines, the case became dead in the water.  The defendants now appear as innocent victims of the OFT’s overzealous enforcement; compounded by BA’s decision to stick by Andrew Crawley, even promoting him to Sales and Marketing Director.

If accurate, these developments certainly do not inspire confidence in the OFT’s role as prosecutor, but I’m skeptical of arguments that the entire deterrent value of criminal sanctions is at stake here.   Maybe so.  These developments certainly don’t help.  And such mistakes are potentially more costly in countries like the UK trying to establish a so-called “culture of competition.”  But I suspect the OFT will be back to business quickly and that it will not require much in the way of dolling out serious criminal sanctions to produce deterrent value.