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BAA Forced To Divest Airport Ownership

by Robin Pilgrim,, London

25 July 2011

The UK Competition Commission (CC) has confirmed its earlier March 30 preliminary decision that BAA is required to sell Stansted Airport followed by Edinburgh or Glasgow Airport.

The confirmation follows the Commission consideration of whether there had been any material changes in circumstances since it published its final report on the BAA case in March 2009 that should give it cause to reconsider the implementation of airport sales required by that original decision.

"The CC has concluded that the sale of the airports is fully justified and that passengers and airlines would still benefit from greater competition with the airports under separate ownership, despite the current government’s decision to rule out new runways at any of the London airports," the Commission said in a concluding statement.

Chairman of the BAA Remedies Implementation Group, Peter Freeman, added:

"We hope that the sales can now proceed without delay so that passengers and airlines can start to enjoy the benefits of greater competition."

"Our report has been challenged, reviewed and upheld and it is clear that the original decision to require BAA to divest three airports remains the right one for customers. It has been a long process whilst BAA has challenged the decision — quite understandably given its significance. However, both we and the courts have now exhaustively re-examined the case for the sales and found it to be sound so there are no grounds for delaying further."

"The introduction of new ownership at Gatwick, whilst too recent for us to draw any firm conclusions, has given a foretaste of the benefits competition can bring. We think that these benefits will be all the greater once Stansted, Gatwick and Heathrow are all in competition with each other."

"There has also been no cause to alter our view on the need for either Edinburgh or Glasgow to be under separate ownership."

"The CC has also concluded that the same timescale should remain for the sale of Stansted followed by sale of one of the Scottish airports. Stansted will be sold first as it serves the larger number of passengers and there will be a small overlap between the two sales periods. In March 2009, the CC indicated a two-year timeframe for the sale of three airports. Gatwick has since been sold so that timescale has been amended to reflect that."

BAA Chief Executive Colin Matthews said that the company was "dismayed" at the the CC's decision.

"The Competition Commission has not recognized that the world and BAA have changed," Matthews commented. "This decision would damage our company which is investing strongly in UK jobs and growth."

Matthews said that BAA is considering a judicial review of the CC's decision. "We have a responsibility to protect our shareholders' investment," he argued.

TAGS: business | law | aviation | United Kingdom

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