On 20 August 2008 the Competition Commission (CC) announced its provisional findings in the airports market inquiry. This is studying the supply of airport services in the UK by BAA. These are only provisional findings for consultation and do not comprise the CC's final conclusions.

The CC has provisionally found that competition problems arise under the current system. The CC considers that these are the result not only of common ownership of airports by BAA but also due to the planning system, aspects of government policy, and the system of regulation.

The CC is consulting on its proposed remedies. These include:

  • BAA to sell two of its three London airports (Heathrow, Gatwick and Stansted) – the CC is seeking views on which should be sold. It has noted that it is unlikely to require the divestiture of Heathrow unless the sale of Gatwick or Stansted is likely to be impractical or ineffective;

  • BAA to sell either Edinburgh or Glasgow airport;

  • Possible behavioural undertakings or regulation in relation to Aberdeen airport, which is found to have a strong local monopoly position;

  • A review of the system of regulation and the role of the Civil Aviation Authority in order to make regulation "more effective without becoming more obtrusive". The CC considers this could be done by adopting some of the processes used in other regulated sectors. The CC believes this could include (i) imposing significant obligations on airport operators as conditions of an economic licence such as standards of service, financial adequacy, ring-fencing and accounting separation, change of control provisions and conditions for revoking the licence and appointing a special administrator, (ii) more powers to intervene between quinquennial reviews, (iii) alternative approaches to regulatory asset base regulation; and (iv) a greater role in facilitating agreement between BAA and airlines on service and investment.

The CC invites comments on its proposals by 17 September 2008. Please click here for the full text of its provisional findings report.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 20/08/2008.