Heathrow third-runway ruling erred on antitrust grounds, rival project to argue

23 October 2019 8:41am

18 October 2019, by Simon Zekaria

The UK government’s approval of Heathrow Airport’s planned expansion was wrongly cleared by judges of breaching state-aid and antitrust rules, project bidder Heathrow Hub will tell the UK's appeal court on Wednesday, 23 October.

The independent group's challenge is one of several currently being heard at the Court of Appeal over a High Court decision in May this year. In that ruling, judges backed the government's approval of Heathrow Airport's own project to build a northwest third runway, sparking a slew of legal challenges from organizations and local authorities.

Their challenges mainly focus on environmental and planning concerns. But Heathrow Hub — the infrastructure body behind a rival plan to extend an existing runway rather than build a new one — has put forward competition-law arguments to fight the government's decision.

Heathrow Hub tried to obtain a judicial review to examine the lawfulness of the government's support of the third runway. But the group has also sought to quash, or cancel, the state's "national policy statement” — which sets out policy reasons for approving nationally significant infrastructure — on which the decision to back the runway was based.

Heathrow Hub is due to present its appeal arguments over three days from Wednesday, 23 October.

High Court case

These arguments will flow from Heathrow Hub's High Court case, which centered on the UK government's backing of the runway last year. UK lawmakers formalized their approval following a recommendation from the Airports Commission, a now-defunct independent aviation body.

At the High Court, Heathrow Hub's approach had two strands:

First, it focused on a precondition imposed by the government, which said that if an alternative to Heathrow Airport's proposal was selected, the airport's owner would still have to "guarantee" to implement the winning project for it to go ahead.

This condition, Heathrow Hub alleged, gave Heathrow's owner an unlawful veto over the tender and gave rise to a potential conflict of interest. It said this meant the guarantee was structurally anticompetitive, requiring no evidence of real-world effects.

Second, it said that Heathrow Airport, through its tender process, abused its dominant position as an infrastructure asset of special status licensed by the Civil Aviation Authority.

The government, in response, said the guarantee only supported its core technical reasons at the heart of the decision to turn down Heathrow Hub’s proposal. It also said the airport’s owner doesn’t have special rights afforded by the state, but rather got its license through a mandatory regulatory regime.

As for the abuse-of-dominance allegation, the government argued that in this case, there isn't an economic market to query through the application of competition rules.

The High Court dismissed Heathrow Hub’s challenge and, in particular, backed the government’s position by saying the tender was run on the objective “merits and demerits” of each runway proposal. That prompted Heathrow Hub's further challenge to the Court of Appeal.

Court of Appeal arguments

In next week's challenge, MLex has learned from case documents that Heathrow Hub will rely on four key grounds.

First, that the tender distorted competition and that the guarantee breached state-aid rules. Heathrow Hub will say that the High Court ignored its position that distortion of competition had taken place before then-transport minister Chris Grayling gave preference to the new runway. On this basis, Heathrow Hub will say Heathrow Airport was unfairly favored, contrary to EU rules.

Second, that the court ignored, and so misanalyzed, Grayling’s citing of the guarantee as part of the government’s decision-making process. MLex understands that Heathrow Hub will argue that Grayling made repeated admissions that the lack of a guarantee from Heathrow Airport towards Heathrow Hub's proposal was part of his decision-making process.

Third, that the High Court wrongly found that Heathrow Hub couldn’t expect Grayling not to reject its plan over the guarantee requirement, even if he found it to be the most suitable proposal. Heathrow Hub will argue that the court didn’t set out the legal test to override public-interest considerations arising out of that expectation, and that Grayling was tasked with discharging it.

As such, Heathrow Hub's challenge focuses on the appropriateness of the court’s own conduct, as much as on the alleged unlawfulness of the government’s conduct.

The fourth ground is over "parliamentary privilege," or the laws governing parliamentary freedoms to lawmakers.

At the High Court, Grayling's statements on the Heathrow build to UK lawmakers in both parliament and parliamentary committees were admitted as evidence by Heathrow Hub. In one such statement, from February 2018, Grayling told a transport committee that the “biggest issue” was that Heathrow Hub couldn’t obtain a written guarantee from Heathrow for its alternative proposal.

Lawyers representing John Bercow, the Speaker of the House of Commons — who safeguards the rights of parliament — intervened to object to such statements being used as evidence, on grounds of parliamentary privilege.

The High Court avoided this issue as by arguing it wasn't necessary to address it.

But Heathrow Hub will raise this issue again at the Court of Appeal. It will argue it was unfairly deprived of the ability to rely on evidence it considered as central to its case, and also that the court then partially used the evidence in a way that prejudiced Heathrow Hub. It will also argue the court’s treatment of Grayling’s comments was legally unsound.

A spokesperson for the government's transport department, now headed by minister Grant Schapps, declined to comment on the case.