The sweeping plans to smash BAA’s hold on the airport market are the competition watchdog’s most aggressive use yet of toughened powers to force companies to sell assets or change the way they do business, lawyers said on Wednesday.
Competition experts said the proposals for BAA to sell three of its seven airports showed how an emboldened Competition Commission was willing to use harsh measures against an unusually dominant company.
The commission’s provisional findings – which BAA’s Spanish owner, Ferrovial, could challenge in the courts – are a further sign of greater friction between big companies and more assertive competition authorities.
Rebecca Owen-Howes, a senior associate at the law firm Denton Wilde Sapte, said the proposal to break up BAA was “hard-hitting” and should make other companies “prick up their ears”.
She said: “This is the Competition Commission showing it has those powers, and exercising them in quite a dramatic way.”
While competition lawyers had expected trouble for BAA because of its near-monopoly over main airports, some were surprised by a commission verdict that one described as “damning”.
Mark Friend, partner at Allen & Overy, said the BAA investigation showed how the commission was “willing to take on difficult cases, and is not afraid to put forward what are pretty radical proposals”.
The watchdog’s provisional findings echo the trenchant tone of its “emerging thinking” report published in April, which gave the first hints BAA was in for a tough time.
Christopher Clarke, commission inquiry chairman, on Wednesday variously characterised the company as unadventurous, unresponsive to customer needs and slow to share information that airlines needed to make strategic decisions.
Mr Clarke gave short shrift to suggestions that the commission might be overreaching itself in its demands for a series of enforced airport sales.
The commission – like its sister body, the Office of Fair Trading – has been bolstered by powers in the 2002 Enterprise Act to give it more independence from government and authority to order businesses to reform.
The Office of Fair Trading, which originally referred the BAA probe to the commission, has in the past year come into conflict with big companies over investigations into industries such as banking and supermarkets.
The commission is due to publish its final ruling on BAA early next year, after which the company could take its case to the independent Competition Appeal Tribunal to try to overturn the findings or simply win breathing space to arrange the airport sales.
Few companies have so far gone to the tribunal over the results of commission investigations, although Tesco has launched a closely watched case over the conclusions of the watchdog’s grocery industry probe this year.
‘I’ve been celebrating all morning. This is the best decision in the history of aviation ever’
Michael O’Leary, chief executive, Ryanair
‘Selling a monopoly to a new owner will not help protect the consumer or improve efficiency. Airports need better regulation’
Andy Harrison, chief executive, Easyjet
‘The ownership structure is secondary, the focus should be on strengthening the regulatory system – that is the way to create the capacity which is most needed’
‘Any attempt to break up BAA will be resisted’
Steve Turner, Unite national secretary
‘BAA should be broken up. We want to see much more competition between our airports’
Theresa Villiers, Conservative shadow transport secretary
‘This is a once-in-a- generation opportunity to ensure airports deliver the standard of service that passengers deserve’
Department for Transport
‘We will continue to point out to the commission the many areas where we believe its analysis is flawed and its remedies would be disproportionate and counterproductive’
Colin Matthews, chief executive, BAA