The UK Competition and Markets Authority ("CMA") has taken competition law enforcement action in a case involving a land agreement for the first time. Heathrow Airport ("Heathrow") and the Arora Group hotels operator ("Arora") have admitted to breach of Chapter 1 of the Competition Act in relation to an anti-competitive car park agreement. Arora was granted full immunity, while Heathrow has been fined £1.6 million as part of a settlement with the CMA.
| What you need to know - key takeaways |
- This is the first time that the CMA has used its competition enforcement powers in relation to a land agreement restriction, in this case a covenant restricting how parking prices should be set.
- The CMA has sent letters to other airports and hotel operators warning against similar agreements.
- Businesses engaged in the car parking sector should review their land agreements in light of this enforcement action, in particular if they have received a warning letter from the CMA.
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The CMA's announcement
On 7 December 2017, the CMA launched an investigation into a suspected breach of the Chapter I prohibition in relation to airport facilities.
On 18 September 2018, the CMA announced that it has found that Heathrow and Arora both breached competition law. In particular:
- It has been investigating Heathrow's agreement with Arora regarding the lease of Arora's Sofitel hotel at Terminal 5.
- This agreement included a clause restricting how parking prices should be set by Arora for non-hotel guests.
- The CMA looked into whether the pricing restriction prevented the Arora from charging non-hotel guests cheaper prices than those offered at other car parks at Heathrow in breach of the Chapter 1 prohibition.
Both parties have formally accepted that the agreement was a breach of competition law and have removed the pricing restriction. Arora had brought the restrictive covenant to the attention of the CMA and was therefore awarded full immunity. Heathrow's fine was reduced by 20 per cent from £2 million to £1.6 million following a voluntary settlement with the CMA.
Practical points of note
Some important considerations flow from this decision:
- Since 6 April 2011, restrictions in land agreements , which had previously been excluded from the UK prohibition on anti-competitive agreements, must comply in full with competition law. However, this is the first time that the CMA has used its competition enforcement powers to impose a fine in relation to a land agreement restriction.
- This investigation has continued a trend of competition investigations into airport facilities. In December 2016, the Civil Aviation Authority announced it had issued an infringement decision finding that East Midlands International Airport and Prestige Parking had engaged in price fixing of car park services.
- The CMA has sent letters to other airports and hotel operators warning against similar agreements. The CMA is likely to have sent these those letters to airports and hotel operators where it believes there to be reasonable grounds to suspect that similar infringing agreements might be in operation. (See Ashurst's Newsletter of March 2017 for an article on the CMA's use of advisory and warning letters).
- Car parks have clearly become a focus of the CMA. In this regard, Ann Pope, the CMA's Senior Director for Antitrust, said: "Airport car parking charges are paid by millions of people and any agreements to restrict price competition are not acceptable." She continues: "Competition law applies to land agreements at airport car parks in the same way as any other type of business arrangement"; and "This fine should act as a strong warning to all companies that the CMA will take action to make sure businesses are free to compete on price."
- Businesses engaged in the car parking sector should review their land agreements in light of this enforcement action, in particular if they have received a warning letter from the CMA.
With thanks to India Case of Ashurst for her contribution.
