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The Legal Constraints upon Competition in the Airline Industry - Case Study Example

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The study “The Legal Constraints upon Competition in the Airline Industry” clears up that actions considered as anti-competitive in the jurisdiction of one country are not treated as such by another country. Different jurisdictions are driven by various forces while implementing competition laws…
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The Legal Constraints upon Competition in the Airline Industry
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Download file to see previous pages Since big airlines operate in a trans-Atlantic manner, they become subject not only to the competition law of the jurisdiction where they are incorporated but also in others where their acts have an effect on. However, different jurisdictions have different application and appreciation of what constitutes anti-competition conduct. The reason for this disparity may be the fact that competition laws may have different forces dominating and affecting their directions. This is evident in the case of the rivalry between the British Airways and the Virgin Atlantic, both incorporated under the UK laws, which long-running competition have brought them to courts of different jurisdictions and were handed contrasting decisions for similar causes of action.
In 1972, the British European Airways merged with the British Overseas Airways Corporation and became the state-owned British Airways.  It was an industry leader even after its privatization in 1987. If faced stiff competition however when in 1991, the Civil Aviation Authority of the United Kingdom recommended the opening of Heathrow Airport to smaller airlines, among which is Virgin Atlantic. In a rather vindictive act, Lord King, chairman of BA stopped its annual contribution of £40,000 to the ruling Conservative Party. Despite this, however, BA continued to be the “largest carrier of international passengers serving 150 destinations in 69 countries” (Bridgewater 1998).
The 1991 Libel Suit in London. In 1990, despite the global economic downturn and the United States deregulation of air travel, both of which had a crippling effect on the airline industry, BA managed to sustain significant profits seen as the best in the industry. Its credibility, however, was tarnished when Virgin Atlantic sued the airline for libel in 1992 in a London court for engaging in dirty tricks for the purpose of eliminating the VA as a strong competitor especially in its most lucrative route which is the UK-US route. The dirty tricks consisted of tapping by BA personnel into the computer system of VA to access the list of passengers and their address and calling these passengers claiming that their flights were canceled or overbooked and offering them alternative booking in BA. During the course of the case, VA also alleged that BA staff broke into the homes of VA personnel and journalists who were involved in the case and also used a public consultant for the purpose of digging dirt into the past of VA CEO Richard Branson to embarrass him publicly. In the end, BA admitted its guilt and settled the case for £2.5 million and issued a public apology (Thakur 1997).  ...Download file to see next pagesRead More
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