BAA Court Loss Will Force Sale of Stansted, One Other Airport

BAA Loses Appeals Case Over Sale of Two U.K. Airports
The Court of Appeal reinstated a decision by Britain’s Competition Commission forcing BAA to sell Stansted airport near London and either the Glasgow or Edinburgh airports. Photographer: Chris Ratcliffe/Bloomberg

BAA Ltd., the owner of London’s Heathrow airport, was ordered to sell two U.K. airports after an appeals court rejected its claim of regulatory bias during a probe of the industry.

The Court of Appeal reinstated the Competition Commission’s March 2009 decision forcing BAA to sell Stansted near London and either the Glasgow or Edinburgh airports. BAA, owned by Madrid- based Ferrovial SA, 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 U.K. 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, had initial success in fighting the forced sales, when an appeals tribunal in December 2009 accepted its argument that an adviser for the regulator didn’t remove himself soon enough in the investigation when a conflict of interest arose. Today’s judgment overturned that finding.

BAA argued that the adviser, Peter Moizer, 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. The court today held that the potential for bias arose much later.

Possible Appeal

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.

BAA 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 adviser 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 9 cents to 7.57 euros in Madrid composite trading. The shares have fallen 7.9 percent so far this year.

Manchester Airport

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.

BAA sold Gatwick airport to Global Infrastructure Partners Ltd. for 1.51 billion pounds ($2.26 billion).

Ryanair Holdings Plc, the Dublin-based discount carrier, 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.”

A break up of BAA may bolster competition and result in better service and more choice of flight destinations, said Peter Smith a consultant at London-based, an Internet travel agency.

“The airport element of travelling has become one of the most horrible parts of the travel experience, whether it’s business or leisure,” he said in a telephone interview. “More competition can only be a good thing.”

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