BAA could be forced to sell UK airports

BAA has been informed by the competition commission that it should sell two of its London airports and one of its Scottish airports.

The ruling comes after complaints that BAA held a ‘monopoly’ status on the control of airports in these two regions and that competition was affected as a result.

If BAA is forced to comply with the measures it would most likely choose to sell Stansted and Gatwick, while retaining ownership of Heathrow.

Ian Giles, competition lawyer, for Norton Rose said: “The Competition Commission has given a clear statement of intent and taken an aggressive approach to shaking up the market. It is the first time that such extensive remedies have been proposed in a market study case of this nature. Natural monopolists in utility and other sectors will be nervous about the implications of this decision.

“Many had believed that only one of Gatwick or Stansted, would need to be divested, but the economic logic always was that separate ownership of each of the three airports will create more competition.

“There remains concerns as to whether separate ownership will really lead to improved consumer services – there is still a big capacity problem, which means airports have captive airline customers, and CAA price caps mean airports will continue to try and boost revenues from retail streams rather than increasing landing charges to fund infrastructure investment.

“The Competition Commission has still not given a clear indication of how it intends to manage the sale of the airports, or the timetable under which it would expect to do so. The current financial climate does not favour an immediate sale, and BAA may well seek to delay any sales if only to try and ensure it gets a better price in better market conditions.”

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