UK: Court of Appeal overturns CAT ruling on apparent bias in BAA market investigation

01 October 2010

Jeremy Robinson

On 15 October 2010, the Court of Appeal issued its judgment in the BAA case.  This was an appeal by the Competition Commission (“CC”) against a ruling of the Competition Appeal Tribunal (“CAT”), which had found that the CC’s market investigation report into BAA airports was tainted by apparent bias.  The Court of Appeal has upheld the CC’s appeal and restored its report into BAA.  That report had found that BAA’s common ownership of airports in the south east of England and lowland Scotland raised adverse effects on competition in the supply of airport services by BAA.

Background

On 19 March 2009, the CC published its report into BAA airports. It found, amongst other things, that the common ownership of airports prevented competition between Edinburgh and Glasgow, and between the London airports Gatwick, Heathrow and Stansted. The CC imposed a package of remedies, including the divestiture of both Stansted and Gatwick Airports as well as either Edinburgh or Glasgow airports.

BAA challenged the legality of some of the findings of the Report as well as the proposed remedy to the CAT under section 179 of the Enterprise Act, claiming that they were unlawful on the grounds of apparent bias and proportionality.

On 21 December 2009 the CAT dismissed the grounds of appeal based on proportionality but held that the market investigation had been tainted by apparent bias, using the “fair-minded and informed observer” test. One of the members of the CC’s investigation group, Professor Moizer, had links with owners of the Manchester Airport Group plc (“MAG”) which were taking part in the investigation and who were also potential bidders. Although no allegation or finding of actual bias was found, the CAT quashed the CC’s decision.

The CC appealed to the Court of Appeal against the CAT’s finding of apparent bias.

Court of Appeal findings

The Court of Appeal had to determine whether, in light of the principles and the test for apparent bias, the CC’s report into BAA airports was tainted by apparent bias.

The Court of Appeal found that Professor Moizer was too remote to MAG to give rise to concern about apparent bias prior to 2 December 2008 and the CAT was wrong to find apparent bias.

The Court of Appeal evaluated three arguments raised by the CC in relation to the period from 2 December 2008 (when the conflict became apparent) to March 2009. These were (i) that the apparent bias had had no operative effect; (ii) that there had been no contamination of the final CC decision after 2 December 2008; and (iii) that BAA had waived the apparent bias.

The Court of Appeal:

  • Rejected the CC’s contention of “no operative effect” as this would blur the distinction between actual and apparent bias;

  • Accepted that there had been no contamination after 2 December 2008 – i.e. the remaining CC Panel members had the opportunity to change their minds after the provisional decision had been announced, but did not do so; and

  • Upheld the CAT’s finding that BAA had not waived the apparent bias.

The Court of Appeal thus allowed the appeals and restored the decision of the Competition Commission. BAA has announced its intention to seek permission to appeal to the Supreme Court.

The case highlights the increasing importance of fair procedures in competition cases.

Source: Court of Appeal judgment in Competition Commission v BAA Limited http://www.bailii.org/ew/cases/EWCA/Civ/2010/1097.html