BAA loses appeal over sale of two UK airports
BAA, the owner of London’s Heathrow airport, must sell two UK airports after an appeals court rejected a claim that a regulator was biased when it investigated competition in the industry.
The Court of Appeal reinstated a decision by Britain’s Competition Commission forcing BAA to sell Stansted near London and either the Glasgow or Edinburgh airports. The company already sold London Gatwick under pressure from the regulator.
“The ruling should put an end to the back-and-forth over the ownership of the key UK airports, bring certainty to the market and inject some much needed competition into the sector,” said Frances Murphy, a lawyer who leads the antitrust practice at Jones Day LLP in London and isn’t involved in the case.
BAA, which was originally ordered to sell the airports by spring 2011, sold Gatwick in December to Global Infrastructure Partners Ltd for £1.51bn (€1.71bn).
BAA avoided selling the other two when the appeal tribunal upheld its claim that the adviser at the center of the dispute didn’t remove himself soon enough in the regulatory process. Today’s ruling overturned that finding.
BAA argued that the adviser had caused “unconscious bias” at an early stage in the probe because he was linked to a group that considered buying some of BAA’s assets.
BAA, owned by Madrid-based Ferrovial, said in a statement it will seek permission to appeal the case to the Supreme Court because today’s ruling confirmed there was possible bias during part of the investigation.
The lower court “was wrong to find apparent bias” before a critical stage of the antitrust review in December 2008, about three months before the regulator’s investigation ended, Judge Maurice Kay of the London-based court said in the ruling.
The adviser, Peter Moizer, also counseled a pension fund that invests money for the local authorities that control Manchester Airports Group, which had considered bidding on BAA properties.
Competition Commission spokesman Rory Taylor said the regulator was “pleased” with the court ruling and that the agency had already taken steps to avoid future potential conflicts of interest.
Ferrovial rose 7 cents to €7.56 in Madrid trading at 1:35pm. The shares have fallen 8pc so far this year.
The London-based Competition Commission has said Moizer, who quit the advisory panel in March 2009, wasn’t involved in the final steps of the process.
Discount carrier Ryanair joined the litigation in support of the regulator. The airline in June urged the appeals court to avoid the temptation of a “puritanical approach” to the case.
The decision “is a great result for competition, consumer choice and passengers,” Ryanair Chief Executive Officer Michael O’Leary said today in a statement.
“Ryanair has fought long and hard for the break-up of the high cost, inefficient BAA airport monopoly.”