The Office of Fair Trading (OFT) has dropped criminal proceedings against four British Airways (BA) executives accused of price-fixing.

The case, which was being heard in Southwark Crown Court in front of Mr Justice Owen, collapsed following the discovery of new email evidence last week.

In a statement, the OFT said: "The OFT has decided to withdraw its criminal proceedings against four current and former BA executives for price-fixing. Following the OFT's decision, the four defendants were acquitted by the jury at a hearing this morning."

The case was originally brought by the OFT in 2008, when the watchdog alleged that four execs – former commercial director Martin George, former head of UK and Ireland sales Alan Burnett, ex-communications head Iain Burns and current sales and marketing director Andrew Crawley – had dishonestly agreed with Virgin Atlantic to fix the prices of fuel surcharges for long-haul passenger flights between 2004 and 2006.

Peters & Peters head of fraud Michael O'Kane advised Burns and Burnett with Matrix Chambers' Ben Emmerson QC and Queen Elizabeth Building's William Boyce QC instructed as counsel respectively.

Meanwhile, Kingsley Napley criminal partner Stephen Pollard advised George with Matrix Chambers' Clare Montgomery QC as counsel, and Irwin Mitchell advised Crawley with 2 Hare Court's Andrew Radcliffe as counsel.

Richard Latham QC of 7 Bedford Row advised the OFT while Slaughter and May advised BA.

The collapse of the case – the first contested prosecution for price-fixing brought by the competition watchdog – is likely to be seen as a serious setback for the OFT. Had the OFT been successful, the defendants could have faced up to five years in jail or received an unlimited fine.

The decision will not affect any civil settlements already agreed by the airlines.