East Midlands International Airport avoids £12.5 million fine as the Civil Aviation Authority ("CAA") concludes its first competition investigation

09 January 2017

Lucinda Richmond-Wigg

Last month the CAA announced its finding that East Midlands International Airport Limited ("EMIA") and Prestige Parking Limited ("Prestige") had infringed competition law by engaging in price fixing.

Prestige operated a small premium parking facility close to the terminal at East Midlands International Airport, which accounted for around 5% of the total supply of car parking at the airport. Prestige required access to the airport in order to provide these parking services.  The CAA, which has powers to enforce competition law as it relates to the aviation sector, found that, as a condition of granting access to the airport, EMIA had required Prestige to charge a minimum price for its car parking services, which was tied to the price of EMIA's own parking services. It was essentially an agreement that Prestige would not undercut EMIA when providing the parking services.  In addition, the CAA also found that EMIA and Prestige had exchanged information relating to their car parking pricing and that EMIA had actively monitored the parking fees charged by Prestige.

Under the Competition and Markets Authority's ("CMA") leniency policy, EMIA disclosed its anti-competitive arrangement with Prestige to the CAA before any investigation was commenced and so received a complete reduction of its fine from £12.5 million to zero. Prestige also confessed to its participation in the cartel and cooperated with the CAA however, as it ceased trading in 2012, the CAA did not impose a fine on the company.

As a result of the investigation, EMIA's ultimate owner Manchester Airports Group Plc ("MAG"), which also owns and operates Manchester, London Stansted and Bournemouth airports, has committed to develop a compliance programme to prevent future breaches of competition law. In addition, MAG will undertake a review of other existing concession contracts involving EMIA, in order to ensure that they also comply.

Richard Moriarty, Director of Markets and Consumers at the CAA, commented that in this case, both parties had independently recognised that the arrangement may be anti-competitive, but had "failed to act on it". This highlights the importance of training to make sure staff properly understand competition law and the significant penalties that can be imposed for anti-competitive behaviour.

The EMIA decision came in the same month the CAA published a final report on its review of surface access at UK airports. The review focussed primarily on road-based access to airports, including car parking services. In its report, the CAA notes that where an airport operates its own car parks alongside independent car park operators, and the latter require access to the airport's facilities in order to operate, this can give rise to price fixing concerns. More generally, the CAA advises all UK airport operators and surface access operators to review their practices and ensure adequate training programmes are in place, so as to ensure compliance with competition law.

Sources:

CAA press release

CAA Report on Review of Surface Access.