Court of Appeal tells BAA to sell Stansted and a Scottish airport

BAA lost the latest round of a long-running legal saga with the competition authorities over its dominance of the UK's airports yesterday, meaning that it will now be forced to sell Stansted, and either Edinburgh or Glasgow airports.

The group, owned by the Spanish infrastructure giant Ferrovial, lost a hearing in the Court of Appeal brought by the Competition Commission.

The case followed a ruling in the Competition Appeals Tribunal earlier this year which found in favour of BAA: that an investigation by the commission was biased because a committee member – Professor Peter Moizer – was an adviser to Manchester Airport's pension fund, which had expressed an interest in investing in an airport.

BAA, which operates Heathrow and has already been forced to sell Gatwick airport, said it would appeal to the Supreme Court. The company argues that the Court of Appeal accepted that "apparent bias" existed during part of the commission's investigation.

"We are disappointed that the Court of Appeal has upheld two of the five grounds argued by the Competition Commission," a BAA spokesman said. "We note the court's view that apparent bias in relation to a panel member existed during part of the commission's investigation and will study this judgment carefully. We will be seeking permission to appeal to the Supreme Court."

The earlier tribunal had found that there was apparent bias in the investigation, but yesterday's hearing upheld an argument by the Competition Commission that this was true only between December 2008 and March 2009, after the pension fund had informed Professor Moizer of its intentions.

The Court of Appeal ruled that Professor Moizer's connection to the Manchester Airport pension fund was too remote to have influenced the original recommendation that BAA be forced to sell off a number of assets.

"We are pleased that the Court of Appeal has found in our favour in the BAA case," a Competition Commission spokesman said.

"The effect of this decision is to restore in full our report together with its remedies including the requirement for BAA to sell Stansted and either Edinburgh or Glasgow airports, Gatwick having already been sold. Our intention now is to work with BAA to implement these measures in the interests of the travelling public."

The commission said it was tightening its procedures following the decision, and that it took "very seriously the need for our inquiry panels to be completely impartial".

Sources close to the commission conceded that it was not surprised that BAA was seeking leave to appeal.

It is understood that BAA will press Professor Moizer's involvement as the central element of its appeal. BAA believes that having established that there was "apparent bias" after December 2008, it has a strong case.

A source close to the company said: "Several key decisions were taken after that date, including the timetable and the criteria for purchasers. It is not just a technicality."

Chris Yates, an independent aviation analyst, said yesterday: "I'm sure that BAA will do everything it can to challenge this decision – Stansted has been a cash cow for the company and gives it a strong footprint in the South-east of England.

Separately, it is believed that Highstar Capital, which owns a 25 per cent stake in London's City airport is hoping to raise as much as £200m from selling the stake.

New York-based Highstar refused to comment, while Global Infrastructure Partners (GIP), the majority owner, did not return calls. GIP also bought Gatwick from BAA last December.

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