The Civil Aviation Authority (CAA) has issued a decision that East Midlands International Airport Limited (EMIA) and Prestige Parking Limited broke competition law by agreeing to fix prices of car parking services at East Midlands International Airport.
An investigation by the aviation regulator found that EMIA and Prestige agreed that Prestige should not sell its car parking services at the airport at below a minimum price, which was linked to the price of EMIA's own car parking services. EMIA imposed this requirement as a condition of allowing Prestige to access facilities at the airport between (at the latest) October 2007 and September 2012. Without this access, Prestige would not have been able to provide car parking services to its customers on the airport site. The CAA has also found that the companies exchanged information about their prices and that EMIA actively monitored Prestige's prices.
Competition benefits consumers and therefore competition law does not allow independent businesses to make arrangements, such as those between EMIA and Prestige, which may damage competition. All businesses, including airport operators are required to comply with competition law and must be aware of the potential harmful consequences for their businesses and consumers of agreeing to set or align their prices.
EMIA and its ultimate owner Manchester Airports Group Plc (MAG), which is the UK's third largest airport operator, would have had to pay a fine of almost £12.5 million as a result of this decision. However, the company proactively disclosed details of the agreement under the Competition and Market Authority's (CMA) leniency programme before the CAA investigation began. As EMIA also confessed to participation in the illegal agreement and co-operated throughout the investigation, the fine was reduced to zero in line with the CMA's policy on leniency.
Following the investigation, MAG has agreed to set up a programme to ensure ongoing compliance with competition law within its business and among staff. It has also agreed to review existing concession contracts that EMIA has entered into, to ensure that they do not break the law on anti-competitive agreements.
Prestige, which was a much smaller airport car parking provider than EMIA, also confessed to having broken competition law and co-operated fully with the CAA's investigation. The company is no longer trading and therefore the CAA will not impose a fine on it. Both parties agreed to follow a streamlined procedure which enabled the CAA to make its decision more efficiently and more quickly.
Richard Moriarty, Director of Markets and Consumers at the CAA, said:
“Competition at airports is crucial to ensure that consumers benefit from choice and value for the whole passenger journey, including for services such as car parking at the airport. The fact that an airport operator owns land at the airport on which an independent business operates, does not mean that the airport can dictate the price of services sold by that independent business.
“This is the CAA's first competition investigation and we found that both parties independently identified that their agreement might harm competition but failed to act on it. It is vital that airports and providers of services at airports understand and comply with competition law. This case should serve as a clear sign that we are prepared to take action to protect consumers wherever necessary and companies should be well aware that they could face a significant fine if they break competition law.”
In addition to this investigation, the CAA has also conducted a wider sector review of road-based access to large UK airports - including car parking services. This explores issues relating to competition for provision of services such as car parking.
For media enquiries contact the CAA Press Office on 00 44 (0)207 453 6030 or firstname.lastname@example.org. You can also follow the CAA on Twitter @UK_CAA.
Notes for editors
- The Competition Act 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK. The Chapter I prohibition covers agreements and concerted practices between businesses which have as their object or effect the prevention, restriction or distortion of competition within the UK and which may affect trade within the UK. Any business found to have infringed the prohibition in the Competition Act 1998 can be fined up to 10% of its annual worldwide group turnover.
- The CAA is a concurrent regulator with the CMA (for both the Chapter I/Article 101 and Chapter II/Article 102 prohibitions). CAA's concurrency was implemented in Civil Aviation Act 2012 and came into force on 1 April 2013. The CAA has powers to investigate breaches of the Chapter I prohibition where this is relation to Airport Operation Services (AOS). AOS are defined in the section 68 of the Civil Aviation Act 2012. In this investigation the relevant aspects of AOS are 68(1)(c) the arrival or departure of passengers and their baggage, 68(3)(b) the provision of facilities for car parking,and 68(5) permitting a person to access or use land that forms part of an airport or facilities at an airport for a purpose described in subsection (1)(a) to (f)
- A party under investigation may ask to enter into settlement if it is prepared to admit that it has breached competition law and is willing to agree to a streamlined administrative procedure for the remainder of the investigation. The CAA may agree to impose a reduced penalty on the business where settlement would achieve clear efficiencies, resulting in earlier adoption of any infringement decision and other resource savings.
- The CAA has not issue a fine in this case for two reasons: firstly EMIA/MAG reported and fully cooperated with the investigation and thus qualified for immunity under the leniency regime. Prestige would have qualified for a fine, however, in ceased trading in 2012. With no turnover the statutory cap has the effect of imposing a zero fine.
- EMIA is an airport operator with an annual turnover of £59.4m and part of the MAG group which has a turnover of £738.4m. As well as East Midlands International Airport it owns and operates Manchester Airport, London Stansted Airport and Bournemouth Airport. It is responsible for 48.5 million passengers in 2015.
- Prestige was a third party car parking operator generating up to £1m in revenues at the height of its operation. It operated up to 750 car parking spaces at the airport some 5 per cent of total supply.
- The investigation was opened in March 2015 a timetable can be found on the case web page: Notice-of-investigation-under-the-Competition-Act-1998.
- The CAA has produced guidance on its application of the competition law. This can be found here: www.caa.co.uk/cap1235. A general overview can be found on our competition pages Competition-powers.
- Under the CMA's leniency policy a business that has been involved in a cartel may be granted immunity from penalties or a significant reduction in penalty in return for reporting cartel activity and assisting the CMA with its investigation. Individuals involved in cartel activity may also be granted immunity from criminal prosecution for the cartel offence under the Enterprise Act 2002. The CMA also operates a rewards policy under which it may pay a financial reward of up to £100,000 in return for information which helps it to identify and take action against illegal cartels. For more information on the CMA's leniency and informant reward policies, go to cartels-confess-and-apply-for-leniency and cartels-informant-rewards-policy.
- The CMA has produced guidance to help businesses understand more about competition law, including what businesses can do to make sure they comply ( competition-and-consumer-law-compliance-guidance-for-businesses). There is also specific guidance to help small businesses ( competing-fairly-in-business-advice-for-small-businesses).
- The CMA runs a hotline for anyone with information about potential cartel agreements between companies. Anyone with relevant information is encouraged to call the hotline on 020 3738 6888 or email email@example.com.