Final Ruling Compels BAA To Sell More Airports 

 - July 25, 2011, 9:00 AM
BAA will have to sell Stansted Airport—as well as one of two Scottish Airports—under a ruling by the UK Competition Commission. (Photo: BAA)

The UK Competition Commission last week confirmed that BAA, the UK airports group purchased by Spain’s Ferrovial Group in 2006, must sell London Stansted Airport and one of its Scottish airports, Edinburgh or Glasgow.

The Commission originally decided that BAA should sell Gatwick, Stansted and one of the Scottish Airports in March 2009, but the company appealed to the Competition Appeal Tribunal (CAT) on the basis that the decision was “vitiated by apparent bias” and that the extent of the remedy was “disproportionate.”

The CAT upheld BAA’s appeal on the bias argument, but the Court of Appeal overturned that decision and affirmed the original Competition Commission ruling. The Supreme Court subsequently refused BAA permission further appeal and, in compliance, the group sold Gatwick to Global Infrastructure Partners (GIP) for £1.5 billion ($2.42 billion) in October 2009.

Not ready to give up, BAA then found new grounds for argument, namely “material change of circumstances and economic conditions” given the time that had elapsed.

Unimpressed, the Competition Commission again rejected BAA’s latest arguments, first in a provisional ruling on March 30 and, finally, last week in a binding decision. Afterward, BAA CEO Colin Matthews called the commission’s decree “draconian.”

“We are dismayed that the Competition Commission has not recognized that the world and BAA have changed,” he complained. 

The company argued that the new UK government’s decision not to proceed with a third runway at Heathrow, the fact that it had sold Gatwick, and the existence of increased competition from non-BAA airports, such as Amsterdam Schiphol, meant that protecting the interest of consumers did not require further divestiture. It also pointed to better operating efficiencies at its airports and to its investment of £5 billion ($8.1 billion) in UK airports since 2006, including some £300 million ($485 million) at Stansted, and a planned £1 billion ($1.62 billion) a year going forward.

Although the Commission said that the sale of Stansted would have to commence within three months, Matthews hinted that BAA might try for a formal judicial review of the process behind the decision, which could further delay the affair and ultimately lead to a repeat of the entire proceeding.