CMA and CAA issue warning letter to airport operators

Heathrow Airport, Terminal 2A, check-in hall, November 2015.
Photo Credit: Heathrow Airport
By Len Varley - Assistant Editor 4 Min Read
4 Min Read

LONDON – The Competition and Markets Authority (CMA) and the Civil Aviation Authority (CAA) have jointly issued an open letter directed at airport operators to remind them of their responsibilities and obligations under competition law.

The joint letter, which was published on the UK government website today, states that the for the warning has come about because the “CMA has recently received intelligence to suggest that some UK airport operators might not always be complying with competition law.”

It goes on to say that the aviation regulator “CAA is aware of this intelligence and shares the CMA’s serious concerns about the possibility of competition law breaches in the sector.”

The two authorities go on to acknowledge that the Coronavirus (COVID-19) pandemic and the impact of the conflict in Ukraine (including fuel costs, rerouting and macroeconomic environment) have “resulted in extraordinary pressures and uncertainty for the aviation sector.”

“In difficult times, it may seem tempting to reduce uncertainty by sharing confidential information with competitors. However, sharing and receiving such information may be illegal under competition law,” the letter continues.

“Giving a competitor insight into your future commercial strategy may reduce competition, leading to increased prices and reduced service or choice.”

“This is unfair to customers (both airlines and end consumers), many of whom have also faced and continue to face significant challenges due to the pandemic and other cost pressures.”

The letter reminds airport operators of the need to provide transparency on the key aspects of how airport charges are derived, and the need for customer consultation in such processes.

The concern that the two authorities hold appears to revolve around potential collusion by airport operators in discussing and sharing pricing and competitive strategies.

The letter states: We consider that it continues to be critical for airports to consult users and abide by the general behavioural principles included in the ACRs, particularly as the aviation industry recovers from the sharp traffic downturn seen during the pandemic.”

“We are aware that many airports will have undergone significant staffing changes as a result of the extremely challenging circumstances of the last few years.”

“With the recovery now well underway, it may be an opportune moment to review your competition compliance policy and ensure that all your current staff have received appropriate training.”

“We should make clear, however, that neither the CMA nor the CAA consider changes in staff or lack of awareness to be mitigating factors for companies that breach competition law.”

“It is your responsibility to ensure that your business complies with competition law.”

The CMA and CAA have reminded airport operators of the potential legal consequences of breaking competition, and the letter closes by outlining formal action which may take place in such instances. These actions may include include:

• fines of up to 10% of a business’ worldwide turnover;

• director disqualifications of up to 15 years;

• criminal prosecutions of individuals directly involved;

• private damages actions; and

• significant and long-lasting reputational damage.

The letter concludes by highlighting the importance of the aviation sector to the UK economy, and noting that healthy competition remains a key factor in keeping it that way.

Last year, AviationSource reported on the CAA’s issuance of a cap on Heathrow Airport’s future charges. Last year British Airways and Virgin Atlantic raised issues with the airport’s increased charges.

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