Heathrow Airport Held to Have Abused Its Dominant Position in Rare Standalone Competition Law Action Before the English High Court

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eapdlaw.com Client Advisory | June 2011 Heathrow Airport held to have abused its dominant position in rare standalone competition law action before the English High Court

On 15 April, through the judgment of Mr Justice Mann in Purple Parking Limited and Meteor Parking Limited v Heathrow Airport Limited,1 the High Court found that Heathrow Airport Limited (“HAL”) had abused its dominant market position, contrary to section 18 of the UK Competition Act 1998 (the “Act”),2 by denying the claimants, Purple and Meteor, access to the forecourts of Heathrow Airport’s Terminals 1 and 3 to enable them to carry out valet parking activities.

The High Court upheld Purple and Mete- provided access for Purple and Meteor’s or’s claims that, by allowing its own valet attendants free of charge. parking division, Heathrow Valet Parking In mid-2010, however, HAL changed (“HVP”), to have continued access to its these arrangements by requiring all third forecourts, at no charge, HAL’s conduct was party valet parking operators to conduct clearly discriminatory. Since HAL was domi- their activities from the short stay car parks nant on a relevant market and its conduct of each terminal, for which they would pay was not objectively justifiable, it was there- an access charge of £1.50 or £2.50 per fore unlawful. visit, provided the pick up or drop off took Beket McGrath place within a specific amount of time. Partner Valet Parking at Heathrow Terminals 1, Crucially, these new arrangements would 3 and 5 not apply to HAL’s own valet parking ser- The claimants conduct valet parking opera- vice, HVP, which would continue to oper- tions at Terminals 1, 3 and 5 of Heathrow ate from designated areas on or adjacent Airport. Valet parking (also described by to each terminal forecourt. Purple and the claimants as ‘meet and greet parking’) Meteor refused to accept the changes and involves a departing passenger handing commenced proceedings in June 2010 over her car to an attendant at the termi- seeking an injunction to prevent HAL from nal, the car being parked at a car park away implementing its proposals. from the terminal and the car being handed back to the passenger at the terminal when The Claim Chika Ochonogor she returns from her journey. Until 2010, Purple and Meteor claimed that HAL’s con- Trainee Solicitor the claimants collected and handed back duct amounted to an unlawful abuse of its travellers’ cars on the forecourts immedi- dominant position on the market for the ately in front of each terminal, to which HAL provision of access to Heathrow Airport’s

1 [2011] EWHC 987 (Ch) 2 Section 18 of the Act, which is also referred to as the Chapter II prohibition, is closely modelled on Article 102 of the Treaty on the Functioning of the European Union (TFEU). 2 | Heathrow Airport held to have abused its dominant position facilities, including its roads and The judge held that passengers forced would not alleviate the problem to forecourts. They claimed that the to use a car park for handover would such an extent as to justify the anti- abuse arose from the unjustified dis- face a longer walk and greater incon- competitive conduct. crimination in favour of its in-house venience than those using the fore- Therefore, the judge found that operator HVP, which placed them at court. Furthermore, using a car park, HAL had contravened section 18 of a competitive disadvantage to HVP especially that of Terminal 1 which the the Act and granted an order prevent- in the downstream valet parking judge described as “a tight, somewhat ing HAL from excluding the claimants market. gloomy, functional concrete car park”, from the terminal forecourts. It is In August 2010, Mr Justice Roth was not a comparable experience to understood that HAL is considering granted an order for an expedited using the forecourt “with its open air appealing the judgment to the Court trial, to take place on the assump- aspect and appearance of just being of Appeal. tion that HAL was dominant in the ‘over the road’”. upstream facilities market.3 As the Comment case started from this common Anti-competitive effect on the This case is interesting for a number consumer ground, the High Court only had to of reasons. Most notably, as a rare decide whether HAL’s proposals The judge held that HAL’s decision instance of a domestic court finding amounted to an abuse of its domi- to exclude rival valet parking opera- that a company has infringed compe- nant position. Since the parties sub- tors was commercially driven, with a tition law, it is a good example of a sequently reached an agreement view of placing them at a competitive relatively small company obtaining in respect of the arrangements for disadvantage so that HVP could gain rapid redress against anti-competi- access to Terminal 5, the judgment more business. In addition, he found tive behaviour from the courts, rather dealt with Terminals 1 and 3 only. that if the proposals were imple- than from a competition authority. It mented, HVP would be the only sup- is remarkable that the judgment was The Judgment plier of valet parking on the forecourts handed down only 14 months after and the rival operators would not be HAL first proposed to change the Discrimination between HVP and the able to compete on quality from the arrangements with third party valet Claimants car parks. Therefore, HVP would have parking operators. Had Purple and Section 18(2)(c) of the Act provides an effective monopoly for the provi- Meteor instead complained to the UK that abuse includes “applying dis- sion of valet parking to the “real meet competition authority, the Office of similar conditions to equivalent trans- and greet customer” and would be in Fair Trading (“OFT”), the OFT may well actions with other trading parties, a position to charge higher prices, to have declined to investigate the case thereby placing them at a competitive the detriment of the consumer. and, even if it had taken it up, the disadvantage”. The claimants argued investigation would almost certainly that the abuse arose in this case from Objective justification for the still be underway and the complain- proposals HAL giving its own downstream valet ants would be facing a further wait parking operation more favourable Since the judge had held that the of about two years before they might treatment, by enabling it to have con- proposals to exclude competing hope to see a decision against HAL.4 tinued access to terminal forecourts operators from the forecourts was At a time when the OFT’s budgets are at no charge. predominantly commercially moti- under pressure, and there is signifi- The court found that, if HAL’s vated, it was no surprise that he also cant interest at the European level in proposals were implemented, there found that the proposals could not facilitating private competition law would be a material dissimilarity be objectively justified by consider- claims, this case is a timely reminder between the conditions applied to ations of congestion. Evidence was that the English courts are an attrac- HVP and the claimants. HVP would produced which showed that there tive forum for such actions. continue to use the forecourts (or an had not been a congestion problem As far as the abuse itself is con- area close to and virtually the same at Terminal 1 for 18 months. Although cerned, this judgment is a reminder as the forecourt, in the case of Termi- there had been a congestion problem that both UK and EU competition law nal 1) at no charge, while the claim- at Terminal 3, the evidence showed impose a ‘special responsibility’ on ants were required to use the car that removal of third party valet park- a dominant business to moderate its parks and pay for each transaction. ing operators from the forecourts behaviour towards its competitors.

3 It is interesting to note in this context that, before his elevation to the bench, Roth J was a respected competition law barrister and editor of one of the leading textbooks, Bellamy & Child –European Community Law of Competition. 3 | Heathrow Airport held to have abused its dominant position

Put simply, while even a dominant that the attempt to move them to the judge found the claimants’ witnesses company should be free to compete car parks was abusive. to have been variously “convincing”, ‘on the merits’, it may find itself in The judgment is also a reminder “reliable”, “careful” and “honest”, difficulties if it cannot give a good that, in competition cases just as in he found that HAL’s witnesses were explanation for conduct that harms a other types of litigation, facts and “evasive”, “defensive beyond the nat- competitor, even if the conduct con- the way in which they are conveyed ural instincts of a cross-examined wit- cerns it controlling access to its own really matter.4 The judge in this case ness”, “overly reluctant to accept that land. It was a critical factor in this case was clearly influenced by the fact which [the judge found] he believed”, that HAL had its own (albeit small) that, even though there was no clear “guarded and cagey”, not always reli- downstream valet parking opera- evidence of anticompetitive intent able, “superficial” and not convincing. tion, since the discrimination finding behind its change in policy on access In light of this, as well as his evident rested on this fact. If HAL had been to forecourts, HAL was unable to pres- dislike of the ambience of Heathrow active only on the upstream facilities ent any cogent evidence that sup- car parks, it is perhaps unsurprising market, the claimants would have ported an alternative explanation. that Mr Justice Mann reached the con- faced a harder challenge in proving It is also notable that, whereas the clusion he did in this case.

4 Statistics published in Annex II to the Department for Business, Innovation and Skills’ recent consultation: A Competition Regime For Growth: A Consultation for Options for Reform indicate that the average end to end timescale of a Chapter II investigation is 31.8 months, or 45 months on appeal. Although the OFT has powers to grant interim relief, pending a final decision, it has used these only once (in the 2006 London Metal Exchange case) and withdrew its direction soon after- wards, following a legal challenge. 5 The contrast with the outcome in another recent case in which a competition law issue came before the courts is strik- ing. In its 16 May judgment in A Nelson & Co Ltd, Bach Flower Remedies Ltd v Guna SPA [2011] EWHC 1202 Comm, the High Court rejected the defendant’s argument that the contract being litigated was unenforceable because it infringed Article 101 TFEU, on the grounds that the evidence supporting this aspect of the case was “general in nature and sketchy”. Although the judge acknowledged that counsel for the defendant (who interestingly was the same as counsel for HAL in the Heathrow case) had “lucidly and comprehensively” summarised the relevant legal principles, he concluded that “the picture of the relevant facts … is an extremely confusing and uncertain one as a result … of allegations being made in such general and undetailed terms and of the absence of adequate cogent evidence.”

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