Competition Commission
 Printable version
|
 E-mail this to a friend
|
BAA airports market investigation-issues statement
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.
