Home News & Events COMPETITION LAW NEWS: Sale of Stansted Airport forced on BAA on competition grounds

COMPETITION LAW NEWS: Sale of Stansted Airport forced on BAA on competition grounds

Monday, 17 September 2012 12:41

In what is considered to be a serious setback in its commercial operations, BAA, the airports operator owned by the Spanish Ferrovial Group, has lost its legal battle before the UK’s Court of Appeal presided by Lord Justice Sullivan, together with Lord Justice Rimer and Lord Justice Mummery, which took only three days to reject BAA’s appeal from an order previously made by the Competition Appeal Tribunal forcing it to sell Stansted Airport. Lord Justice Sullivan is said to have remarked that overturning the order would have led to “a perverse result”.

However, BAA is not giving up easily since it has already declared that it intends to pursue the matter before the Supreme Court which can also decide not to hear the case. BAA has argued that owning Heathrow Airport and Stansted Airport was not deemed to be in breach of competition law principles since they do not compete for the same traffic, describing Heathrow Airport as a global hub whilst Stansted Airport as a rather domestic hub.

Should eventually BAA be forced nonetheless to sell Stansted Airport, the sale is expected to fetch at least £1b or 12 times last year’s earnings before interest, tax, depreciation and amortization.

The whole legal issue was instigated after a 2009 ruling given by the European Commission on Competition which ordered BAA to sell its airports at Stansted and Gatwick when it was found that BAA enjoyed an unfair market presence through a monopoly by owning three London airports, they being Heathrow Airport, Stansted Airport and Gatwick Airport. It also owned Edinburgh and Glasgow Airports as well as hubs at Aberdeen and Southampton. BAA has since sold its Edinburgh and Gatwick Airports to Global Infrastructure Partners. Edinburgh Airport alone, which was sold during the first quarter of this year, fetched £807m.

BAA has argued before the Court of Appeal that given the current global recession, it should not be forced to sell Stansted Airport which is dominated by low cost operator Ryanair and has experienced a steep decline in passengers’ traffic, within a time limit since otherwise it could suffer financial risks from its sale. However, the Court of Appeal has rejected such an argument because of public interest to generate more competitive benefits for the end consumer.

Dr Michael Tanti-Dougall, Managing Partner, Tanti-Dougall & Associates, Advocates was the author of the original draft of the Competition Act in Malta, participated in subsequent amendments thereto and has represented various corporate clients before the relevant Authorities as well as before the European Commission on competition law matters. He has delivered various lectures on the subject and is also author of various competition related papers including of the Malta Chapter in the prestigious three-volume compilation entitled ‘European Competition Laws – A Guide To The EC And Its Member States’ published by LexisNexis and edited by Professor Frank Fine.