Competition Commission
On 30 June 2006, the Office of Fair Trading (OFT) announced that it would carry out a study under the Enterprise Act 2002, to consider the UK airports market.
Having completed this study and consultation, in April 2007 the OFT formally referred BAA to the Competition Commission (CC) and invited the CC to investigate the supply of airport services within the UK under section 131 of the Enterprise Act 2006.
Since then, we have made over a thousand submissions to the CC. We responded to the CC's statement of issues in September 2007 and its Emerging Thinking in May 2008.
Our response to CC initial findings
Competition Commission website
Our evidence can be summarised as follows:
BAA's ownership of seven UK airports does not distort competition
The CC published its provisional findings in August 2008. The Commission now has two years within which to make a decision, meaning that a final decision has to be made by March 2009.
Some of the main documents BAA has published can be found here:
BAA/CC2008/099 – BAA’s initial submissionBAA/CC2008/500 – BAA’s response to CC’s issues statementBAA/CC2008/800 – BAA’s response to CC’s emerging thinkingBAA/CC2008/650 – BAA’s response to CC’s allegationsBAA/CC2008/1066 - Strategic policy overviewBAA/CC2008/1109 - Comments on British Airways response to Emerging ThinkingBAA/CC2008/1119 - Response to allegations made by RyanairResponses to CC’s working papers:
BAA/CC2008/930 - Market DefinitionBAA/CC2008/936 - Scottish SubstitutabilityBAA/CC2008/948 - Potential for competitionBAA/CC2008/949 - BenchmarkingBAA/CC2008/954 - Profitability and InvestmentBAA/CC2008/961 - SwitchingBAA/CC2008/969 - The Planning System and Airports PolicyBAA/CC2008/998 - Airline YieldsBAA/CC2008/1058 - Technical airport capacity Price Control Reviews
Under an Act of Parliament, our regulators - the Civil Aviation Authority (CAA) and the Competition Commission - review price caps at our three London airports every five years (known in this context as a quinquennium). The review covers two major aspects of our business:
Annual increases in revenue from airport charges per passenger restricted to not more than the rate of inflation (Retail Price Index) plus or minus x percentage points
The CAA has completed its review of prices at Heathrow and Gatwick. Copies of the decision document can be found on the CAA’s website.
The quinquennial review of prices at Stansted is currently underway. Before the CAA can set new price controls, it has to refer BAA to the Competition Commission.
The Commission’s investigation is currently in progress (more information can be found on their website) and it is expected to report back to the CAA in October 2008.
Links to:
BAA/CC2008/750 – BAA’s main submission to CAA on Stansted
BAA/CC2008/1080 - Response to working paper on Assessment of competition at Stansted Airport
BAA/CC2008/1120 - Response to CC paper on Assessment of LRAIC-based Price Cap
CAA’s referral of STN to CC
Other useful economic and regulation links:
Conditions of use (with airport charge prices)
Regulatory accounts
DfT Review of Economic Regulation
BAA welcomes the DfT’s review of economic regulation, which comes 22 years after the Airports Act was written. This is a good opportunity to review the regulatory regime.
In BAA’s initial submission to the DfT, we emphasise three main points:
There are valid lessons to be drawn from other sectors, however the differences between airports and other sectors should be clearly understood and reflected in any outcomes
The institutional framework needs to change. There is no clear alignment around airports expansion policy or environmental policy Regulation must be considered as a spectrum
Links to:
BAA/RER/001 - BAA’s response to the DfT’s review of economic regulation
DfT website
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