Virgin launches new onslaught against BA: 'Kickbacks' complaint filed with EC

VIRGIN ATLANTIC yesterday opened up a new front in the war with British Airways by filing a complaint with the European Commission accusing its larger rival of paying 'kickbacks' to distort the market.

In a formal submission to the EC's competition authorities, Virgin claimed that BA was using a range of financial incentives to persuade travel agents and large corporations to book with it rather than with other airlines.

The complaint, filed on the eve of BA's annual meeting in London today, is one of a number of legal and regulatory moves being taken by Virgin in the wake of the dirty tricks affair.

Today's shareholders' meeting at the Barbican Centre in London is expected to be dominated by the affair. Of the 2,000 questions submitted by shareholders, a third relate to this one issue.

Virgin's complaint accuses BA of breaching articles 85 and 86 of the Treaty of Rome by offering target, loyalty and kickback discounts in order to weaken its rivals and strengthen BA's dominance.

According to Virgin, travel agents are being offered bigger commissions the more customers they book on BA flights while corporations such as BT are receiving discounts provided employees fly only with BA.

Richard Branson, Virgin's chairman, said that although this might mean a better deal in the short term for passengers it would inevitably lead to higher prices and reduced competition and prevent new airlines from starting up.

'In many cases people in large companies want to fly Virgin but are prevented from doing so,' he added. 'Not only that, but some travel agency staff are sometimes encouraged to offer products which are neither the best quality nor value for money for the customer simply to reach their kickback target.'

Virgin has already begun a High Court action against BA arising out of the dirty tricks case, alleging breach of copyright and misuse of confidential information.

The airline is also still examining whether to launch anti-trust proceedings against BA in the US which, if successful, could result in triple damages.

BA said last night that it was aware of reports of Virgin's complaint to the EC, but since it had not seen details of the allegations and had not been contacted by the EC it was inappropriate to comment further.