Two airlines fined $300 million for price-fixing

WASHINGTON — Two major airlines were fined $300 million apiece today after admitting they conspired to fix prices on international flights.

British Airways, Britain's largest airline, and Korean Air, South Korea's national carrier, pleaded guilty to antitrust conspiracy charges. Both saw their potential fines reduced because they cooperated with U.S. Justice Department investigators.

U.S. District Judge John D. Bates said the case "involved considerable commerce and reflected long-term and widespread conduct involving major airlines and players."

The airlines admitted that they colluded with rivals over cargo rates and fuel surcharges, which were added to fares in response to rising oil prices. That meant higher costs for international shippers and passengers.

Korean Air's fines could have been twice as high and British Airways could have faced fines closer to $900 million, but the Justice Department credited the company with cooperating in the case. Bates agreed.

Earlier this month, authorities in London announced $246 million in fines for British Airways in a parallel trans-Atlantic investigation. Both inquiries are ongoing.

As part of its plea deal, British Airways admitted that between mid-2004 and early 2006, it colluded with Virgin Atlantic over the surcharges, which were added to fares in response to rising oil prices. Virgin Atlantic is not named in the Justice Department case and is not expected to face a fine in Britain because it reported the misconduct to authorities.

"As a foreign corporation with headquarters outside the United States, BA could have retained highly relevant documents in its foreign offices and refused to cooperate," prosecutors wrote. "It chose, however, to assist the United States early in its investigation in a highly significant and useful way."

Between 2004 and 2006, fuel surcharges rose from about $10 to about $120 per ticket for a round-trip, long-haul flight on BA or Virgin.

The $300 million criminal fines were the second-largest antitrust sanction by the Justice Department since 1995. The largest antitrust fine, $500 million, was against vitamin giant F. Hoffman-La Roche in 1999 in a price-fixing case.