The shock announcement sent BAA shares 6 per cent lower and cast huge doubt over the hostile £8.8bn bid for the company from the consortium led by the Spanish construction and road tolls giant.
BAA said that the OFT's announcement, which coincided with the launch of the company's final defence document against Ferrovial, had come as a "complete surprise".
Shares in the company sank 46.5p to 787.5p, leaving them 3 per cent below the 810p offer price tabled by Ferrovial. The Spanish company declined to comment but was thought to be seeking legal clarification about whether to press ahead with the bid or ask the Takeover Panel to allow the offer to lapse.
A spokeswoman said that Rafael del Pino, the chairman of Ferrovial, was "unrattled" but added that the company would now clearly need to assess the position in consultation with its backers, the Canadian pension fund CDP and GIC, the private equity arm of the Singapore government.
The OFT said it was "considering looking into the UK airports market with a view to establishing whether the current market structure works well for consumers". It said it would make a detailed announcement about the scope of any review by the end of next month, adding that it could lead to a possible referral to the Competition Commission. This in turn could result in the break-up of BAA if the commission decided its monopoly was operating against the public interest.
John Fingleton, the chief executive of the OFT, denied he had been asked by ministers to undertake a review of BAA to scupper the Ferrovial bid. "There were no discussions with the Government about that," he added. Mr Fingleton said the OFT had begun to give serious consideration to a review of BAA in April and, in light of the takeover bid, needed to make an announcement.
The OFT statement noted that BAA handled 63 per cent of all air passengers flying to and from the UK but in the London area, where it owns Heathrow, Gatwick and Stansted, its share rose to 92 per cent, while in Scotland it was 86 per cent.
The OFT's announcement completely overshadowed the launch of BAA's defence document, which put a value of at least 940p a share on the company before any takeover premium. The document also detailed BAA's plans to return £750m of cash to shareholders and pledged a 40 per cent increase in the dividend this year.
The low-cost airlines easyJet and Ryanair, both of which have been lobbying for a break-up of BAA's London airport monopoly, welcomed the prospect of an OFT investigation.
Michael O'Leary, chief executive of Ryanair, said: "When the BAA monopoly offers a sweetener of £750m to its shareholders to reject Ferrovial's bid, it clearly proves that this monopoly has been overcharging passengers and feathering its own nest. The only way to improve the lot of passengers is to break up the BAA monopoly airports and force them to compete against each other."
Andrew Barker, easyJet's planning director, said: "No company should control more than 90 per cent of London's airport capacity and a similar amount in Scotland. BA is a dominant player in a near-monopoly environment. As a consequence BAA can bank high profits which have to be paid for by passengers without the healthy pressure of competition."
Mike Clasper, BAA's chief executive, argued that there was no reason why an OFT inquiry should alter the underlying value of the company and that if it led to deregulation of the airport market it could even make the company more valuable.Reuse content