CAT 3
1 Feb 2012
Judgment of the Tribunal in connection with an application by BAA Limited (“BAA”) for review of a decision by the Competition Commission (“CC”) dated 19 July 2011 (“the 2011 report”). The 2011 report was issued by the CC following its consultation on whether there had been any material change of circumstances (“MCC”) that, pursuant to section 138(2) of the Enterprise Act 2002, was such as to justify a departure from the remedies decided on by the CC in its report of 19 March 2009 on the supply of airport services by BAA in the United Kingdom (“the 2009 report”).
Having considered the legal framework, and each of the 2009 report and the 2011 report, the Tribunal dismissed BAA’s application, concluding in particular that:
• In relation to BAA’s first ground of challenge (improper assessment), the CC was entitled to conclude, on the basis of the analysis in the 2009 report and the 2011 report, that an adverse effect on competition (“AEC”) with very substantial impact arose from the common ownership by BAA of Heathrow, Gatwick and Stansted (as at 2009) and from the common ownership of Heathrow and Stansted (as at 2011). Further, the CC was entitled to form the view that the constrained capacity benefits (that is, the benefits arising even if there were no expansion or expectation of expansion in runway capacity in the south east) identified in the 2011 report were real and significant, and significantly outweighed the costs to BAA of divestment, such that a requirement of divestiture was a proportionate remedy. The Tribunal concluded that there was no failure of proper investigation by the CC in respect of any of these matters.
• In relation to BAA’s second ground of challenge (failure to examine the reasons for the increase in Stansted’s spare capacity in 2011), the Tribunal concluded that the increase in capacity at Stansted since 2009 was an additional point noted by the CC in the 2011 report, but it did not rely upon it when making its assessment that the constrained capacity benefits outweighed the costs to BAA.
• In relation to BAA’s third ground of challenge (defective comparison of airport profitability), the CC was entitled to conclude that the fall in profitability at Stansted did not constitute an MCC, and the CC’s assessment in that regard fell well within its margin of appreciation or evaluative discretion.
• In relation to BAA’s fourth ground of challenge (improper assessment of the costs of divestment), the Tribunal concluded that it was not open to BAA to seek to introduce (on this review) submission and evidence regarding a new head of alleged loss, having failed to present the CC with any contentions or evidence regarding this alleged head of loss at the relevant time. Further, where the CC concludes after a market investigation that a company must divest itself of a business in order to remedy an AEC, there is no further complaint that can properly be made that the action of the CC is disproportionate.
• In relation to BAA’s fifth ground of challenge (alleged failure by the CC to understand representations made by the Civil Aviation Authority), the Tribunal concluded that the CC was entitled to read these representations as referring to capacity constrained benefits, and to accept and rely on them in the way that it did.
This is an unofficial summary prepared by the Registry of the Competition Appeal Tribunal.