Stansted sale on ice as BAA lands appeal win over 'bias'

Court 'reluctantly' finds that competition panel may have been affected by bias

The competition ruling forcing BAA to sell off airports including Stansted was thrown into disarray yesterday, after a court ruled that a member of the watchdog's judging panel could have been affected by "apparent bias".

The Spanish-owned BAA claimed victory as the Competition Appeal Tribunal (CAT) upheld one appeal against the Competition Commission, in a damaging ruling for the regulator.

The 100-page judgment said the court unanimously supported BAA's challenge of "apparent bias" against Peter Moizer, a Commission panel member who had links to a company bidding for one of BAA's airports. Mr Justice Barling said he had reached the conclusions with "the greatest reluctance" given that the appeal had taken two years to complete at considerable expense.

A spokesman for the Competition Commission said: "We are disappointed with the tribunal's decision. We take the matter of impartiality extremely seriously. We are now studying the judgment and its implications carefully to see if there are any grounds for an appeal." A source close to the investigations said: "The Commission should never have let itself get into the position of losing this on a technicality."

A spokesman for BAA said the company was "pleased" with the decision and senior management was preparing to meet with the Commission early next year over where the decision leaves the proposed sell-off of several of its core airports.

"Everyone is just working out what the ruling means. Everything is in disarray, but it may give BAA some breathing space to sell off its airport" one industry insider said. The decision essentially postpones the original ruling, as it made no judgment on whether the findings were correct or not.

The Office of Fair Trading referred its investigation into the supply of airport services in the UK to the Competition Commission in March 2007, after Spanish group Ferrovial bought BAA in a £10.3bn deal. Two years later, the competition watchdog published its report, which found that BAA's ownership of a number of airports "gives rise to adverse effects on competition".

It called on the company to offload Stansted and Gatwick to different buyers, as well as selling either Edinburgh or Glasgow. The airports had to be sold within two years of the report's publication otherwise the regulator would call in an independent group to sell it off for them. That process is now on ice as BAA prepares to return to the table with the commission.

BAA, which also owns Heathrow, sold Gatwick in October in a deal worth £1.5bn to Global Infrastructure Partners. The deal was expected to complete this month.

The first part of the group's appeal to the CAT focused on Professor Moizer's presence on the panel that conducted the commission's investigation, alleging "apparent bias". It added that there was no indication that Professor Moizer was actually biased.

The issue centre's around Professor Moizer's role as a long-term strategic adviser to the Greater Manchester Pension Fund, which backs the Manchester Airport Group (MAG). The MAG, which operates Manchester airport, failed in a bid for BAA's Gatwick airport this year.

The judgment said there was a "real possibility that Professor Moizer would be affected by bias in favour of MAG" adding "justice must be done and be seen to be done". Professor Moizer stepped down in March, before the report was adopted by the five commission members, but the CAT did not believe it was early enough.

The group also appealed on the two-year timeline set by the commission to sell off its airports. It argued that the downturn in aviation and the wider markets would force it to sell off the assets at a hugely discounted price. The CAT dismissed this appeal. The appeal court will now invite submissions from both parties on what happens next, with a further hearing set for the new year, unless the two parties can agree an unlikely resolution before.

Norman Baker, the Liberal Democrat spokesman on transport, was disappointed by the decision. He said: "It is not right for one company to run more than one airport in London.

"This is bad news for passengers. They are the ones who suffer when one company has a stranglehold over the UK's airports."