Naughty British Airways, caught last week in the act of price-fixing. That the Americans fell on the airline with a vengeance must have come as no surprise.

US trade regulators are notorious for total sense of humour loss in dealing with those who mess with the laws of Mammon.

However, the £120m Office of Fair Trading (OFT) fine - the biggest it has imposed - is a wake-up call that UK regulators now not only have the powers, but are keen to show their claws, says Scott Kerr, who advises on competition law with commercial law firm Semple Fraser.

Scottish business beware.

He said: "The fine imposed upon BA by the US Department of Justice last week came to about £300m. That is a very large number, with further penalties likely to follow. I know there has been a temptation for many to think of it as another example of the American legal system coming up with huge damages claims which wouldn't happen over here'.

"Well happen it has. Philip Collins, chairman of the OFT, stated this serves to remind companies of the substantial risks involved if they are found to engage in such behaviour' and added that the level of fine would send an important message' to businesses about the OFT's intention to enforce the law."

A quiet word in a rival's ear ... not quite an arrangement as such ... just a levelling of the playing field in troubled times. How could anyone suspect?

Well, says Kerr, here is how.

The Competition Act 1998 sets out a basic prohibition of any agreements or concerted practices which may affect trade within the UK and have as their object or effect prevention, restriction or distortion of competition within the entire country - similar rules apply under European Union legislation for any such activities affecting trade within the EU.

Breach of the anti-competition rules is not itself a criminal offence, but the powers of investigation are similar to those available to the police investigating serious crime.

Price fixing is prohibited, and so the discussions that took place between BA and Virgin Atlantic over level of surcharges they would impose following fuel cost increases is a clear breach of the rules.

Kerr said: "Virgin Atlantic's decision to go to the OFT to kiss-and-tell has proved a very wise move for them. The OFT's policy is to give whistleblowers immunity given the difficulty they would otherwise face in finding out about such activities.

"But even if OFT hadn't been given this clear lead, they might have had their suspicions of increases occurring at the same time and of the same amounts. Now there can, of course, be perfectly reasonable explanation - if you see your competitor making a price rise which will stick, why not do it yourself? The alternative is to undercut, but it's a balancing act of higher profit against increased sales at a lower profit margin.

"But even without Virgin's whistleblowing, the OFT could have carried out its own investigations. Where it has reasonable grounds for suspecting a breach - disaffected, or worried, members of a cartel, employees or even members of the public making a complaint - the OFT can carry out an investigation exercising powers more akin to anti-terrorist swoops or drugs busts."

Without a warrant, OFT officers can enter a business premises or means of transport and if entry is refused, can force entry, and impose fines afterwards. The power does not extend to an individual's home, or to the premises of the business' external advisers - lawyers, bankers or accountants. Anyone caught up in an inspection, is entitled to contact legal advisers.

Inspectors are entitled to examine all relevant documents including books and records, travel tickets, diaries, records of telephone calls made and expense claims, as well as computer records and electronically stored documents.