COMPETITION
COMMISSION News Release (47/07) issued by The Government News
Network on 9 August 2007
The Competition
Commission (CC) has today published an issues statement as part of
its investigation into the supply of airport services by BAA in
the UK. BAA owns seven airports: Heathrow, Gatwick, Stansted, and
Southampton in England; and Edinburgh, Glasgow and Aberdeen in Scotland.
The statement follows the initial process of information
gathering, including visits to airports and holding hearings with
interested parties. It identifies the key questions being addressed.
The Office of Fair Trading (OFT) made the reference to the CC on
29 March 2007. The CC will now determine whether there are any
features of the market that prevent, restrict or distort
competition and, if so, what remedial action might be taken.
Christopher Clarke, Inquiry Group Chairman and CC Deputy Chairman
said: We have already collected extensive evidence from a wide
range of parties including BAA itself, the CAA, the OFT, airlines
and industry bodies, other providers of services to the airports,
consumer and business groups, as well as government in both
England and Scotland.
We are well aware of the concerns expressed in the media and
elsewhere over the operations of BAA's airports, especially
Heathrow, Stansted and Gatwick. These include delays experienced
by passengers going through security or immigration, as well as
the availability of facilities such as lifts, escalators and
travelators, and other aspects which may affect passengers'
experience passing through airports, such as overcrowding, signage
and cleanliness.
Our task is to seek and assess the evidence on all aspects of the
seven airports relevant to a competition inquiry. We are therefore
looking carefully at a wide range of issues, many of which are
complex and interrelated as will be readily apparent from
today's detailed statement. Some may be short-term but given
the nature of airports, others involve much longer timescales
stretching over the next 10 or 15 years.
We are looking at how common ownership could affect BAA's
incentives both to invest in and develop its airports, and operate
them. We are particularly assessing how the quantity,
specification, quality, location and timeliness of capital
expenditure, ranging from capacity to security, might be affected
by common ownership. Similarly, in terms of operations, we are
examining how it might affect incentives to improve operating
efficiencies as well as levels of service, including recently, and
most notably, security.
We are also considering the consequences of the airports'
regulatory regime which is very different from most other
regulated industries. In addition, we are assessing the impact of
restrictions on airport development and constraints on capacity in
terms of runways, terminals, other facilities, and airspace for
planning or other reasons.
The purpose of the statement is to share our current thinking on
what issues we are addressing and to provide the opportunity for
interested parties to submit new or further evidence. At this
stage, we have no preconceived ideas of what our conclusions might
be; and if we were to identify competition problems, what the
appropriate remedies might be. It is much too early for that. Our
next stage is to analyse and assess all of the evidence and
following further hearings, we expect to publish for consultation
in the early part of 2008 a document setting out our
'emerging thinking' on all the key issues. We currently
aim to reach our provisional findings around this time next year.
The full statement is available on the CC website at: http://www.competition-commission.org.uk.
The CC would like to hear views on the issues statement from all
interested parties, in writing, by 28 September 2007. To submit
evidence, please email airports@cc.gsi.gov.uk or write to:
The Inquiry Secretary (Airports market inquiry)
Competition
Commission
Victoria House
Southampton
Row
LONDON
WC1B 4AD
Notes for editors
1. The CC is an independent public body, which carries out
investigations into mergers, markets and the regulated industries.
2. The members of the Airports inquiry group are Christopher
Clarke (Group Chairman and CC Deputy Chairman), Laura Carstensen,
Dr John Collings, Professor Jonathan Haskel, Richard Holroyd and
Professor Peter Moizer.
3. The CC is also currently carrying out a statutory review of
the CAA's proposed price controls for Heathrow and Gatwick
airports, which will govern how much the airports' owner,
BAA, can charge airlines during the five-year period beginning
April 2008. The CC is carrying out a review of these price
controls as well as examining whether the airport owner has
pursued any conduct during the last five years which has operated
against the public interest. The CC must submit its
recommendations to the CAA by September 29 2007; these will be
considered by the CAA before commencing its final consultation in
November prior to reaching its final decision before April 2008.
4. In 2006 BAA was acquired by Airport Development and Investment
Ltd (ADI), a wholly owned subsidiary of FGP Topco Ltd, in which
Grupo Ferrovial, S.A. (Ferrovial) has a holding of 61.06% [of the
ordinary shares]. The other two shareholders in FGP Topco Ltd are
Airport Infrastructure Fund L.P. (28.94%), which is managed by
Caisse de depot et placement du Quebec and Baker Street Investment
Pte Ltd (10%), a subsidiary of GIC Special Investments Pte Ltd. In
the UK, Ferrovial owns Belfast City Airport, which is not subject
to this reference by the OFT.
5. Under the Enterprise Act 2002 the OFT can make a market
investigation reference to the CC if it has reasonable grounds for
suspecting that competition is not working effectively in that market.