Richard Branson’s Virgin Atlantic airline could be stripped of its whistleblowing immunity in a price-fixing cartel case after the prosecution of executives at the company it was alleged to have conspired with—British Airways—collapsed.

The Office of Fair Trading, the U.K. agency that enforces competition law, abandoned its prosecution of four BA executives yesterday after new evidence came to light.

The men were the first to face prosecution under the Enterprise Act 2002, which gave the OFT new powers to crack cartels. Among them, the power to grant immunity from prosecution to three Virgin executives who blew the whistle on BA’s alleged offense in 2006.

The OFT said it dropped its case three weeks into a planned six-month trial after “a substantial volume of electronic material” came to light last week. This included e-mails sent or received by Paul Moore, one of the Virgin whistleblowers who was due to give evidence. The agency said the prosecution could have continued if the new evidence had been revealed earlier.

Virgin did a “complete cooperation” deal with the OFT when its investigation started in 2006. The agency said its approach to handling leniency applications was “still evolving” at the time and it has since changed its procedures. That approach will now change again, it said.

In particular, the OFT said it will review the role played by Virgin and its advisers “in light of the airline's obligations to provide the OFT with continuous and complete cooperation.” It warned, “This may have potential consequences for Virgin's immunity from penalties.”

BA has already agreed on a £121.5m ($180.3 million) fine to settle a civil case brought by the OFT, but said it is now reconsidering whether to pay the money. The company also agreed to a $300 million linked fine with the U.S. Department of Justice, part of a 2007 plea deal.

The case involved claims that Andrew Crawley, BA's head of sales, and three former executives, ex-commercial director Martin George; former head of U.K. and Ireland sales Alan Burnett; and then-head of media Iain Burns, dishonestly conspired with Virgin Atlantic to fix the price of fuel surcharges. The offense was alleged to have occurred between July 1, 2004, and April 20, 2006.

The collapse of the case led to angry comments from Ben Emmerson of Matrix Chambers, who was defense counsel for the men. “The OFT has been guilty of incompetence on a monumental scale” and was “not fit for purpose,” he said. The case against the men was “ludicrous,” he added.

The OFT released a statement today saying the defense had “unreservedly withdrawn” those remarks.