On 21 December 2009, the Competition Appeal Tribunal (CAT) gave judgment upholding claims of apparent bias affecting the report of the Competition Commission (Commission) of 19 March 2009, titled “BAA airports market investigation” (the Report) as a result of a Commission member’s position as adviser to a pension fund governed by ten local authorities which collectively owned the shares in the group owning Manchester airport and other airport interests.
The Report was the result of a two-year market investigation by the Commission, following a reference from the OFT on 30 March 2007. The Report concluded that adverse effects on competition arose from the dominance of BAA Limited (BAA) as an airport operator in South East England and the lowland areas of Scotland, and that these effects could be remedied by requiring BAA to sell both London Gatwick and Stansted (to separate buyers), and one of either Edinburgh or Glasgow. BAA voluntarily announced the sale of Gatwick before the final Report was published.
On 22 May 2009, BAA issued an application for a review of the Report under section 179(1) Enterprise Act 2002. This entitles a “person aggrieved” by a decision of the Commission to apply to the CAT for a review of that act according to the principles applied in judicial review proceedings (s.179(4)). BAA contended that the Report had been tainted by apparent bias, and that the Commission had failed to take account of the proportionality principle when setting timescales for divestment of BAA assets.
The Tribunal held that a finding of apparent bias was justified owing to the involvement of one member of the Commission’s Reporting Committee throughout the review.
Professor Peter Moizer was an active and long-standing adviser to the Greater Manchester Pension Fund (the Fund), providing strategic investment advice, though according to the evidence presented he did not assess individual investments. This appointment was revealed to BAA when the Commission investigation first began, though, crucially, further details on the background of the Fund were omitted. The Fund was and is governed by the ten local authorities within the Manchester area, and those authorities also collectively held the entire shareholding in the Manchester Airports Group (MAG), which owns Manchester Airport and other airport interests in the UK and internationally. Although this information had been released into the public domain via the posting on the Commission’s website of a 2002 letter relating to a separate quinquennial review of price controls imposed on BAA’s London airports, that letter was not communicated to BAA at the time of the 2002 review, nor had it been brought to BAA’s attention during the 2007-2009 market review. Therefore, it was held there had not been an adequate disclosure of Professor Moizer’s interests.
The CAT concluded that the position of MAG as an interested party in the investigation, and as a potential alternative operator to BAA / member of a subsequent bidding consortium for Gatwick, would lead a “fair minded” and impartial third party to conclude that there was a “real possibility” that Professor Moizer could have been affected by bias. This situation of conflict arose after MAG took an active role in the Commission investigation in October 2007, and the Tribunal found that it became more acute when the Fund prepared for the speedy acquisition of BAA assets in consortium with MAG and others in March 2008. However, no actual bias by Professor Moizer was ever alleged or found.
Professor Moizer stood down from the Reporting Committee a week before approval of the Report; however, the CAT concluded that he had a sufficiently influential role throughout the investigation so as to taint the ultimate Report with his apparent bias.
BAA alleged that the timescales imposed for the sale of Gatwick and Stansted failed to take account of their commercial impact on BAA, as there was a risk that no bids would be submitted until shortly before the deadline for divestment, and that lack of time would be exploited by bidders to force BAA to accept a lower price. The CAT found that it was “inconceivable” that the Commission had not considered this “risk of loss” thoroughly before setting a timetable, and this was reflected in the staggered timetable allowed for the sale of different airports in the Report. The fact that the Commission did not implement BAA’s specific timing demands could not disturb the conclusion that the Commission gave proportionate consideration to the timing issue.
The Tribunal left open the question of how the finding of attempted bias should be remedied, subject either to agreement being reached between BAA and the Commission, or for decision by the CAT itself following further submissions from the parties. It is unclear at present whether the Tribunal will order that the full two-year investigative process be started afresh.
Source: BAA Limited v Competition Commission  CAT 35. Judgment of 21 December 2009