On Monday BAA began its appeal in the Competition Appeal Tribunal ("CAT") against the UK Competition Commission's ("CC") order that it should sell three of its UK airports (following the CC's market investigation into BAA's airports). In March of this year the CC ruled that BAA's position in the UK airport sector gave rise to adverse effects for competition and that it should sell its existing airports at Gatwick, Stansted and either Edinburgh or Glasgow.
BAA, a subsidiary of the Spanish Ferrovial infrastructure group, is appealing against the CC's divestment remedy on two grounds. First, BAA claims that the CC's decision was made with an "apparent bias" as Professor Peter Mozier, a member of the CC's panel at the time of the decision, was also an adviser to the Greater Manchester Pension Fund. BAA claim that the Greater Manchester Pension Fund had an interest in acquiring BAA's divested assets. BAA is understood to have produced detailed evidence including documents, letters and telephone calls to show that Professor Mozier must have been aware the Greater Manchester Pension Fund was planning on bidding for Gatwick airport. BAA claim that Professor Mozier's conflict of interest meant that he should not have had access to information and documents at the time.
As part of the second element of its appeal, BAA claims that the initial two-year deadline set by the CC for BAA to sell its UK airports is unfair as it does not take into account the severity of the current recession. BAA claims that being forced to sell its airports in this two year window will mean that it will receive a lower price than it otherwise would do in other market conditions.
Also this week, as required by the CC's report, BAA reached an agreement to sell Gatwick airport to Global Infrastructure Partners for £1.5bn. Global Infrastructure Partners currently owns London City Airport however the CC has provisionally approved details of the sale (the final purchaser undertakings are now subject to public consultation). Negotiations to sell Gatwick had been on going for over a year. The deal is also subject to approval by the European Commission under the EC merger control rules. BAA still owns Heathrow, the UK's largest airport.
To read the original Community Weekly Summary (Issue 444 - dated 23rd October 2009) in its entirety please click here.
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