UK aviation and competition authorities publish joint warning letter to airport operators following concerns of suspected anti-competitive practices
On 26 January 2023, the Competition & Markets Authority ("CMA") and the Civil Aviation Authority ("CAA") published a joint open 'warning' letter reminding UK airport operators of their obligations under the UK's competition laws. This follows "recently received intelligence" which indicates that UK airport operators might be engaging in anti-competitive practices – namely illegal information exchange which is a serious breach of the competition rules that can result in significant consequences for operators and individuals, including fines of up to 10% of worldwide group turnover, criminal prosecutions, imprisonment up to 5 years, director disqualification orders of up to 15 years, and third party damages actions.
What is going on here?
The open letter suggests that UK airport operators may have been engaging in exchanges of competitively sensitive information relating to airport charges and other pricing or competitive strategies. Engaging in such practices is considered problematic as it can reduce strategic uncertainty between competitors and allow them to pursue anti-competitive strategies like price fixing or restrictions in supply levels, or otherwise coordinate their behaviour in such a way that could have a negative impact on other businesses and consumers (resulting in higher prices, reduced services or less choice for airlines and consumers). The letter also warns UK airport operators that ongoing pressures facing the aviation sector – notably, the Covid-19 pandemic and the war in Ukraine which has resulted in high fuel costs and rerouting – cannot be used as an excuse or a front to pursue anti-competitive activities.
What information are airport operators allowed to share?
Large airport operators (defined in a calendar year as an airport used by more than five million passengers two years before) are required under the Airport Charges Regulations 2011 (the "ACRs") to consult with customers on proposed changes to airport charges. However, the CAA / CMA caution that although it is appropriate to consult publicly before modifying airport charges, sharing or discussing additional information relating to pricing or competitive strategies with other airport operators constitutes an anti-competitive practice. Despite the ACRs only applying to large airport operators, the CMA / CAA advise all airports to abide by the general principles of the ACRs.
Next steps
The regulators have not disclosed whether they are investigating these concerns raised. But the open letter is a clear warning shot to UK airport operators to 'clean up their [competition law] acts' (where relevant) and that the CMA / CAA will not shy away from launching a formal investigation if they receive sufficient evidence of the alleged breaches from a third party complainant or, alternatively, if one of the UK airport operators were to blow the whistle on the alleged activities and apply for immunity/leniency (offering cooperation and details of the infringing action(s) in exchange). Saliently, the CMA / CAA can investigate historic anti-competitive activities and it is not required that any alleged violations of competition law be ongoing at the time of any investigation in order for one to be launched.
Airport operators should review their competition compliance
This development is a timely reminder of the importance of competition law compliance - indeed, the CMA / CAA state in the warning letter that "it may be an opportune moment to review your competition compliance policy and ensure that all your current staff have received appropriate training". Given the consequences for breaching competition rules can be severe (as indicated above) and this clear recommendation from the regulators, airport operators should take the time now to review their competition compliance and training policies. Crucially, neither the CMA nor the CAA consider staffing changes or lack of awareness to be mitigating factors for breaches of competition law, and the CMA / CAA recommend airport operators seek legal advice to ensure their competition policies are compliant and staff training is up to date.
