Court of Appeal rejects Heathrow third runway competition law appeal

R (Heathrow Hub Ltd) v Secretary of State for Transport [2020] EWCA Civ 213

The Court of Appeal has today handed down judgment in the two appeals challenging the Government’s decision to adopt a National Planning Statement in favour of a third runway at Heathrow. Besides the well publicised success of the climate change challenge brought by Plan B Earth and Friends of the Earth, the Court also gave judgment in the separate competition law based judicial review brought by Heathrow Hub Ltd (“Hub”).

This judgment is significant not only for its analysis of the principles to be applied under articles 106(1) and 102 of the Treaty on the Functioning of the European Union (“TFEU”) regarding abuse of a dominant position, but also for its discussion of the principles governing the application of Article IX of the Bill of Rights, concerning the circumstances in which statements made in Parliament can be used in court challenges.

Hub had promoted an alternative scheme to that promoted by Heathrow Airport Ltd (“HAL”) and adopted by the Government. Their scheme was for an Extended Northern Runway (“ENR”), extending the current northern runway so that it could effectively operate as two separate runways, with aeroplanes landing on one and taking off from the other. Hub owned the intellectual property rights to this scheme.

Hub alleged that the Secretary of State had breached EU law by insisting (prior to the decision on which scheme to prefer) that HAL must provide a guarantee or assurance that it would implement the Claimants’ scheme if that scheme were selected by the Government as its preferred scheme for airport expansion, and making the provision of that guarantee or assurance an effective pre-condition to the selection of the ENR Scheme. The alleged pre-condition was said to be unlawful as a matter of EU law insofar as it breached articles 106(1) and 102 TFEU, as it facilitated an abuse or potential abuse of dominance by HAL. Hub also argued that the decision had been made in breach of their legitimate expectation that no such assurance would be taken into account, and that it should be quashed on the grounds that the reasons provided for the decision were inadequate.

The Court of Appeal (Lindblom LJ, Singh LJ and Haddon-Cave LJ) dismissed Hub’s appeal from the Divisional Court in its entirety. The Court found that Hub had enjoyed no legitimate expectation of the kind asserted. In respect of both the legitimate expectation claim and the competition law complaint, the Court found that the matters complained of had played no material part in the decision to prefer the north-west runway scheme over the Claimants’ scheme. In so doing, it rejected Hub’s case that statements made in Parliament by the then Secretary of State for Transport, Chris Grayling MP, showed that the most important reason for the rejection of the ENR scheme was the lack of a guarantee or assurance, dismissing Hub’s argument that to do so was in breach of Article IX of the Bill of Rights.

The Court of Appeal criticised the Divisional Court’s willingness to entertain the competition law complaint notwithstanding its immateriality. Nonetheless, it went on exceptionally to consider the complaint, and to overturn the Divisional Court’s conclusions insofar as they had been adverse to the Secretary of State and to HAL.

• First, the Court held that Hub had not established that it was competing in a market for the provision of airport operation services, commenting that “Competition law is not concerned with regulating a contest between rival schemes to be chosen under a national planning policy.”
• Secondly, the Court rejected the Divisional Court’s conclusion that HAL had “special or exclusive rights” within the meaning of Article 106 TFEU by virtue of its predecessor BAA’s former status as a state monopoly and/or the operation of the CAA licensing regime.
• Thirdly, the Court held that Hub had failed to demonstrate that HAL was dominant in a relevant economic market in which it was competing, in the absence of any expert economic evidence to that effect.
• Fourthly, the Court rejected Hub’s argument that the mere existence of a conflict of interest (such as a request to HAL that it guarantee Hub’s scheme before it could be selected) was sufficient to found a breach of Article 106 and 102 TFEU, absent any liability to distort competition.

The Court refused Hub permission to appeal.

The judgment is here.

Robert Palmer QC and Alan Bates acted for the Secretary of State for Transport. Gerry Facenna QC acted for Heathrow Airport Limited.