BAA accuses watchdog of ‘acute’ conflict of interest

Lucy Tobin
19 Oct 2009

The appeal by BAA against the Competition Commission's (CC) decision to force it to sell Gatwick and Stansted kicked off today with an explosive claim of conflict of interest at the powerful monopoly regulator.

The airports operator told the CC Appeal Tribunal that a “powerful connection” between one of the regulators on the panel, Professor Peter Moizer, and a company keen to bid for Gatwick, meant the watchdog's recommendation that it sell Gatwick, Stansted and either Edinburgh or Glasgow airports was “riven through with an acute and intolerable conflict of interest”.

Acting for BAA, Nicholas Green QC said Moizer — who was part of the CC board that recommended BAA sell three of its seven UK airports — was linked to the Manchester Airport Group, one of the companies interested in buying Gatwick. Just weeks ago Manchester Airport was seen as one of two front-runners, although now the rival bidder, Global Infrastructure Partners, is expected to clinch the deal for £1.5 billion.

Moizer is one of three advisors to the Greater Manchester Pension Fund, which is a shareholder in Manchester Airport. He joined the CC in 2001. Documents from the time show that just a year later the CC published a “disclosure of interest” between Moizer and another BAA competition inquiry. It concluded that “Professor Moizer should not participate in any joint meetings of the Manchester and BAA groups, nor in any smaller bilateral group”.

Yet the CC today confirmed that Moizer has been involved in the latest inquiry into BAA since it was established in 2007.

The airport owner seized on that fact at the tribunal to accuse the competition watchdog of “apparent bias”.

BAA said when it discovered Mozier was involved in the ruling, it raised the matter with the CC. But BAA, which is owned by Spanish firm Ferrovial, said that although Moizer stood down from the inquiry at “the 11th hour”, the CC “didn't tell anyone about this”.

The claims will raise questions about the way the competition watchdog carries out its inquiries. A spokesman for the CC said: “We will be defending our case in due course and until then, running through the arguments before we've done so in the Tribunal itself would be rather frowned upon.”

But acting for BAA, Green claimed that the CC had “failed to address BAA's very real and very legitimate concerns.”

Green said: “The most experienced member of the CC had a powerful connection with one of the main parties to the inquiry.

“The CC astonishingly seeks to cast the blame on BAA. This was a fundamental failure on the part of the CC to act in a fair manner.”

BAA also said it was appealing on the grounds that the CC had not made a proper assessment of the negative financial impact of the requirement to sell three airports within a two-year timetable. Green claimed the cost of meeting such a timetable would be “substantial” to BAA, which earlier this year saw annual, pre-tax profits slump 18.4% to £582 million as passenger numbers plunged in the recession.

The case is expected to last three days, with a decision around two months later.