David Prosser: BAA humbles Incompetence Commission

Outlook: BAA is hardly likely to invest more than it can get away with in assets that it knows it will soon be selling off

Do we need a Competition Commission inquiry into the Competition Commission itself? After all, the monopoly that the authority enjoys on matters of competition seems to have led to its infection with an alarming level of incompetence.

The Commission spent two years and goodness knows how much money investigating BAA's stranglehold on the UK's airports before a hugely controversial ruling that it should be forced to sell three of them off. But whatever the rights and wrongs of that ruling, what possessed the CC to leave itself open even to the possibility of accusations of bias?

No one – not even BAA – is suggesting that Peter Moizer behaved improperly during his time working on the CC's investigation into BAA. But though Professor Moizer eventually stepped down from the inquiry – he had another role advising a possible bidder for BAA's Gatwick Airport, which left him conflicted – his resignation came too late to save the CC from a challenge of potential bias.

Note that the Competition Appeal Tribunal (CAT) yesterday rejected BAA's other claim, that forcing it to dispose of three airports in two years was unfair. In other words, the only argument against the ruling with which BAA has had any luck is the one concerning Professor Moizer's conflict of interest. The CC should never have allowed such a problem to arise in the first place.

Given BAA's failure to win its fairness challenge, it seems unlikely that the CAT ruling will change the outcome of this case in the long term. But the airports operator will no doubt enjoy the embarrassment of its foes at the CC, whose credibility has been damaged by this affair. And the practical consequence of the ruling is that BAA will now almost certainly have longer than it was expecting to sell off two more airports. (It has already agreed the sale of Gatwick.)

For BAA, it is good news that its rather opportunistic challenge to the CC has paid off. Buyers will still know that the company is a forced seller, but by the time it gets round to negotiating on the price of, say, Glasgow, Edinburgh or Stansted, Britain may have put the recession behind it. BAA may well be able to command fuller bids for its assets at a time when the economy is once again growing strongly.

In the meantime, all the arguments that persuaded the CC to order these disposals in the first place remain valid. More so, in fact, since BAA is hardly likely to invest more than it can get away with in assets that it knows it will soon be selling off.

For the customers of certain airports – including airlines, passengers and retailers – that means a longer wait for improvements. All because the CC couldn't get it right on the most basic matter of impartiality.

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