Court defeat for BAA over airport sell-off

A decision that could force airport operator BAA to comply with an order to sell three of its airports was restored by the Court of Appeal today.

In March last year, the Competition Commission (CC) ruled that BAA must sell Gatwick and Stansted airports as well as one of either Glasgow or Edinburgh.

But BAA successfully appealed against this, with the Competition Appeal Tribunal (CAT) finding last December that there was "apparent bias" in the CC's ruling over Gatwick.

In turn, the CC went to the Court of Appeal in June to challenge the CAT decision.

Today, Lord Justice Maurice Kay, Lord Justice Jacob and Lord Justice Patten said that the CAT was wrong to find "apparent bias" and restored the Commission's decision.

They refused BAA's application to appeal to the Supreme Court, although the authority can renew its application direct.

BAA had already decided to sell Gatwick even before the March 2009 CC sell-off ruling which had followed a lengthy inquiry into UK airport ownership.

However, BAA was concerned that Professor Peter Mozier, one of the CC airports' inquiry panel, had a connection to the Manchester Airport Group which had been interested in buying Gatwick.

In its ruling last December, the CAT agreed with BAA's claim that Prof Mozier's role meant there had been "apparent bias" in the sell-off decision.

The CAT said Prof Mozier was not actually biased "but that a fair-minded person would have concluded that there was a real possibility of bias".

Gatwick was sold last year for £1.5 billion to US-based investment fund Global Infrastructure Partners.

As well as running Stansted, Glasgow and Edinburgh airports, Spanish-owned BAA also operates Heathrow, Southampton and Aberdeen airports.

In his judgment, Lord Justice Maurice Kay said the relevant legal test was whether a "fair-minded and informed observer", having considered the facts, would conclude that there was a real possibility of bias.

Such a person was not "unduly sensitive or suspicious".

He concluded: "I am entirely satisfied that, once in possession of the true facts about Prof Moizer's position, the fair-minded observer would conclude that, at all times between April 2007 and December 2 2008, Prof Moizer was untainted by apparent bias."

The judge said that Prof Moizer's relationship was with the Greater Manchester Pension Fund - where he was one of three external advisers - and not with Manchester Airport Group (MAG) or the local authorities.

"He had no reason to suppose that the fund was going to consider joining in the MAG bid for Gatwick. He was too remote from MAG and its owners for apparent bias to be a real concern."

The court had heard from BAA that Prof Moizer did not step down until March 3 2009 and it was not known what influence he might have had during that period.

But the Commission said that nothing in the panel's views changed significantly after December 2, while its provisional findings had been published the previous August.

The appeal judges agreed with counsel for the Commission, who said that to conclude that there was a real possibility that the "apparent bias" of Prof Moizer after December 2 afflicted the Commission's final decision was "moving into the reaches of fantasy".

In the context of the "iterative" nature of the Commission's procedure and the stage it had reached by December 2, they did not consider that a fair-minded observer would regard the final decision to have been tainted.