In January 2014, the High Court held that Luton Airport had abused its dominant position in granting a concession to National Express to operate a coach service from Victoria to Luton Airport. However, it also concluded that Luton Airport's procurement process in awarding the concession to National Express was not unfair. It reached this decision on the basis that Luton Airport had granted exclusivity to a sole coach operator, which would create barriers to entry in the market. The case serves as a reminder of the increasing overlap between competition infringements and challenges to procurement procedures, as well as the restrictions placed on those in a dominant position when awarding contracts and concessions.
For 30 years Arriva the Shires Ltd ("Arriva") had operated a coach service between Victoria and Luton Airport in accordance with a concession agreement with the airport. This concession agreement did not confer any exclusivity in relation to services between the airport and London. In 2013, Luton Airport did not renew the concession agreement, but instead held a tender to invite coach operators to bid for the rights to operate the route. This concession was won by National Express who were given an exclusive right to run a coach service between the airport and central London for seven years, subject to an exception for a service operated by easyBus, and National Express were granted a right of first refusal over the operation of other services on routes between the airport and other destinations in London.
Arriva claimed that Luton Airport had abused its dominant position in the market for the grant of rights to use the airport land and infrastructure for coach services to and from the airport. In particular, Arriva claimed that the way in which the tender process was run was abusive because Arriva were not given an equal opportunity to put forward its terms; and the terms of the concession were abusive because of the exclusivity granted to National Express, the exception in favour of easyBus and the grant of first refusal in respect of other routes.
The High Court concluded that the tender process was not an abuse of Luton Airport's dominant position. There was no evidence to show that Arriva had been ruled out of the tender process before bidding, despite a dispute between Arriva and Luton Airport having affected relations, and Arriva were not disadvantaged in making their bid by being given less information than other operators because they had the advantage of having much more information and experience due to being the current operator of the route. The High Court further held that the marking process by which the winner of the tender was selected was fair, because despite Arriva's complaints their bid was clearly significantly worse than the other two bids.
However, the High Court held that the terms of the concession was an abuse of Luton Airport's dominant position. The High Court held that the grant of exclusivity to a single operator has a distortive effect on competition as competitors cannot enter the market and compete. In this case, there were therefore serious barriers to entry created by preventing any operator other than National Express and easyBus from providing the services. The High Court held that there were three further factors which increased the anti-competitive effect on the market: the period of exclusivity went beyond the time when a new expanded bus station would be opened that could otherwise have allowed the airport to expand and develop services to London; National Express was granted a right of first refusal over alternative routes to prevent competing services; and easyBus was treated differently to Arriva in being granted an exception to the exclusivity granted to National Express.
The High Court considered whether there was an objective justification for the terms of the concession and concluded that there was not. There was not sufficient evidence that there was too much congestion at the bus station to allow for further services and in any case, the evidence suggested that Luton Airport had granted exclusivity in order to maximise the share of revenue and minimum fee that National Express was willing to provide for operating the route, and not due to congestion concerns. On the facts, these were the only factors in the minds of the decision makers when granting the concession and therefore there was no objective justification for the distortion of competition.