Herbies client BAA under fire from Competition Commission

Herbert Smith-client BAA was dealt a blow today when the Competition Commission signalled its intention to force a break-up of the near monopoly the company operates in the supply of airport services in the UK.

Airport operator BAA dominates the market in the South- East and in lowland Scotland, the commission said in its interim report on its investigation into the competitiveness of the company.

Herbert Smith’s head of competition Elizabeth McKnight is advising BAA on the inquiry.

The ’emerging thinking’ report, which is a precursor to a wider investigation, sets out the commission’s views on competition in the UK airport market on the basis of evidence already submitted to the inquiry.

It said: “BAA’s common ownership of seven airports in the UK may not be serving well the interests of either airlines or passengers.”

The commission said it was yet to reach any conclusions but if competition problems were identified in its interim report in August it would also identify “possible remedies”.

Chairman of the BAA Airports inquiry Christopher Clarke said: “BAA dominates the airports markets in the South-East of England and lowland Scotland, both areas of high economic activity and importance.

“Currently, there is no competition between BAA’s three London airports (Heathrow, Gatwick and Stansted) and only limited competition from non BAA airports (including London City and Luton).

“Similarly, there is no competition between their two airports in lowland Scotland (Edinburgh and Glasgow) although Glasgow does face competition from one non-BAA airport (Prestwick).”

The commission set out a series of concerns, which included: BAA’s common ownership of each of its seven airports and the way it conducts its business; the lack of responsiveness to the differing needs of its airline customers and the implications it has for the “levels, quality, scope, locations and timing of passenger investment and levels and quality of service”.