The ignominious collapse last week of the first contested prosecution by the OFT for the cartel offence (section 188 of the Enterprise Act 2002) in the BA ‘Fuel Surcharge’ trial may seem like a farce, until you recall that four entirely innocent defendants had their lives blighted for four years. The OFT wanted the cartel offence, designed to punish individuals who ‘dishonestly’ fixed prices to ‘send a message’. Last week’s debacle certainly sent a message but it wasn’t the one the OFT intended.

After the directed verdict of ‘not guilty’, the defendants walked from court with their ‘reputations unsullied’, while the OFT’s credibility is deservedly in tatters. Now locked in an unseemly tiff with Virgin Airlines and threatening to withdraw its whistleblower immunity, the OFT also faces demands from BA to cancel the civil fine it agreed to pay in July 2007.

Once the dust has settled, what lessons can be learned? First, justice was a big winner. Defendants charged with the offence in future – if that ever happens – should have no doubt as to the fairness of the judicial process if they go for trial. The ‘undisclosed’ evidence that sunk the prosecution case would probably never have come to light if the defence had not fought tooth and nail at every turn.

The OFT must conduct a rigorous self-assessment of its capacity to handle complex trials. How could it have effectively farmed out the crucial task of document disclosure to lawyers representing Virgin, the only other party in the cartel? The OFT’s contacts with its own witnesses were also filtered through batteries of Virgin lawyers.

Case selection must be more consistent. Last year the OFT ducked the challenge after widespread bid-rigging was uncovered in the construction industry. A more unsuitable case for the first test run of the cartel offence than BA is hard to imagine. Had they ever been called upon to judge the ‘honesty’ of the accused according to normal moral standards, how would the jurors have viewed the ‘get out of jail free’ card handed to Virgin executives? One can only charitably assume the OFT’s judgment was clouded by the prospect of BA scalps and what it likes to call a ‘high impact outcome’.

The OFT’s leniency programme, which grants blanket immunity to self-confessed criminals, needs urgent review. How can the prosecution rely as witnesses of the truth on those who have had to admit they were dishonest themselves?

Leniency makes investigators lazy. More effort should be made to detect cartels by old-fashioned police methods. Cartels always leave a paper trail. Indeed, to get whistleblowers though the door at all, there must be a credible risk of being uncovered by other means, or else everyone will soon work out that if nobody talks, everybody walks.

It is also clear that, for the cartel participants themselves, leniency is no panacea. From Virgin’s perspective, what may once have seemed a smart competitive move to ‘rat out’ a rival at no risk to itself – apart from lawyers’ fees – could well turn out to be a spectacular own goal. Not only could it now risk being fined itself for the alleged BA cartel; ironically it now has the finger pointed at it by Cathay Pacific alleging a totally different cartel, albeit one strenuously denied by Virgin. Immunity applications tend to set off a chain reaction, and applicants should be sure they have uncovered all their own exposure before rushing in to denounce a competitor.

For its part, BA might regret its hurry to settle with the OFT and admit a civil infringement in 2007. Lawyers in ‘leniency’ cases should not be overawed into thinking that rolling over is the only viable defence strategy.

Lastly, the cartel offence itself is in the frame. There is a good case for criminalising cartels, but this was not the way to do it. ‘Dishonesty’, inserted in the act by the OFT to send a ‘seriousness’ message, remains untested before a jury. It may never be. After this fiasco, the offence must be a prime candidate for David Cameron’s ‘bonfire’ of useless legislation.

Julian Joshua is a cartel specialist partner at Howrey