BA to appeal over fine

British Airways has launched an appeal against a fine of nearly £5 million for breaching EU rules on fair competition, the European Court of Justice confirmed today.

The fine was imposed by the Brussels Commission in 1999 following complaints from Virgin Atlantic that BA's generous incentives schemes for travel agents made them more likely to try to push tickets on BA flights.

Last December the European Court of First Instance upheld the Commission decision, declaring: "The performance reward schemes used by British Airways to calculate travel agents' commissions constitutes an abuse of the dominant position held by BA on the UK market for air travel agency services".

Now BA has lodged its appeal - but it will almost certainly be next year before the case is heard.

Under the BA agreement travel agents were guaranteed performance bonuses based on sales growth in addition to basic commission.

Virgin Atlantic first complained to Brussels in 1993 and BA amended the system after a European Commission inquiry.

Virgin complained again in 1998 that the arrangements were still unfair, and the Commission fined BA for abusing its position, arguing that the scheme encouraged UK travel agents to push BA ticket sales in preference to those of rival airlines.

The European judges last December said the Commission had correctly decided that BA had abused its dominant position.

They described the BA performance reward scheme as "restricting the freedom of UK agencies to supply their services to the airlines of their choice, and thus of limiting access by BA's competitor airlines to routes to and from UK airports, without that system being based on any economically-justified consideration."