Background

The Court of Appeal has reversed the decision of the Competition Appeal Tribunal (CAT) which quashed, on the ground of apparent bias, the decisions, findings and reasoning contained in the Competition Commission's report into the common ownership of airports by BAA (the Report).

The judgment addresses two important issues. First, when an outside interest by a decision maker will be sufficient to create an apparent bias that makes the decision unlawful. Second, whether the apparent bias of one member of a decision-making body will contaminate the deliberations of the other members and so compromise the decision of the body as a whole.

The judgment turned on the finding that, even where one of a group of decision-makers has been tainted by apparent bias, it does not follow automatically that all other members of the group must have been similarly tainted. While the court acknowledged that its conclusions were fact-specific, the case confirms that a finding of apparent bias in respect of one individual will not necessarily render invalid the decisions made by a body of which he or she was a part.

Such a distinction between a member of a body and the body as a whole is only possible both where decisions are made collectively and where the body's deliberations are open to scrutiny. In the regulatory context in which this case arose, the court was able to delve into the decision-making process and assess the extent to which the apparent bias of one individual was capable of tainting the decision itself. By doing so, it took a more pragmatic approach than the CAT and significantly raised the bar for BAA and future claimants seeking to have a decision quashed for apparent bias.

The full judgment of the Court of Appeal in Competition Commission v BAA Limited can now be accessed online.

The case

In March 2007 the Office of Fair Trading (OFT) made a reference to the Competition Commission for a market investigation into the supply of airport services in the United Kingdom. The Competition Commission appointed a six-member panel to investigate.

The panel published the Report in March 2009. It found that BAA's common ownership of airports in south east England and Lowland Scotland gave rise to an adverse effect on competition, and by way of remedy required (among other measures) the divestiture by BAA of Gatwick and Stansted airports and one of Glasgow and Edinburgh airports.

One of the panel members, Professor Peter Moizer, also acted (as he had done for many years) as an external adviser to the Greater Manchester Pension Fund (the fund). The maintenance of the Fund is delegated to the Pension Fund Management Panel (PFMP), which comprises councillors from the ten local authorities within Greater Manchester. The same ten local authorities also own the issued share capital of Manchester Airport Group plc (MAG), which in turn owns Manchester airport and some other airports in the United Kingdom.

MAG played an active role in the Competition Commission's investigation, and a MAG consortium, including the Fund, ultimately made a bid for Gatwick airport (which, in a pre-emptive move, was put up for sale by BAA before the Report was published).

Professor Mozier stood down from the Panel on 3 March 2009. This was less than three weeks before the Report was published, and around three months after he became aware that the Fund was involved in a potential bid to purchase Gatwick.

BAA appealed to the CAT, alleging that apparent bias arose from Professor Mozier's link to the Fund, and the Fund's relationship with MAG.

The CAT upheld BAA's appeal and by an order of 25 February 2010 quashed the decisions, findings and reasoning contained in the Report, referring the matter back to the Competition Commission for reconsideration.

The Competition Commission (and Ryanair as Intervener) appealed to the Court of Appeal, which on 13 October 2010 reversed the CAT's decision and reinstated the Report. It did so on the basis that, while Professor Mozier's position was indeed compromised by apparent bias, that bias had not contaminated his fellow panel members or the Report.

Key to the outcome of the case was the Court of Appeal's finding that Professor Mozier's position on the panel was compromised only from December 2008, when he learned that the Fund was considering involvement in a bid for Gatwick. The CAT had identified apparent bias much earlier in the investigation, on the basis of Professor Mozier's involvement with the Fund and the Fund's links with MAG. The Court of Appeal ruled that the links between the Fund and MAG were too tenuous, by themselves, to give rise to any perception of bias. It was only when the Fund became actively involved in a bid for Gatwick that the appearance of bias arose.

Having therefore identified a much shorter period during which Professor Mozier's position was compromised by apparent bias, the Court of Appeal went on to assess whether there was a real possibility that this appearance of bias had contaminated the panel as a whole.

In particular, it considered evidence about the extent of Professor Mozier's involvement in the panel's deliberations between December 2008 and his stepping down from the panel. It found that the iterative nature of the panel's considerations, the fact that it had published provisional findings and possible remedies before December 2008 which did not subsequently change, the exclusion of Professor Mozier from certain key meetings concerning Gatwick, and the relatively short period during which his position was compromised meant that any idea that he might have tainted the views of his panel colleagues was "moving into the reaches of fantasy".

Imputing knowledge of the panel's decision-making process to a notional 'fair minded and informed observer', the court applied the accepted test for apparent bias (which was set out in Porter v Magill in 2002). This is "whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased". It concluded that, while Professor Mozier was certainly tainted by apparent bias for a time, the fair minded observer, having first informed herself of all the facts, would have decided that the panel as a whole, and the report which it produced, was not.

Commentary

There are two important elements of this judgment for those tasked with making decisions on the part of public bodies.

The first is the Court of Appeal's rejection of the CAT conclusion that Professor Mozier was tainted by apparent bias before the Fund became involved in a bid for Gatwick.

Professor Mozier's connection to MAG - through his advisory role to the Fund which was managed by representatives of the owners of Manchester Airport - could, at best, be described as indirect and remote. The CAT's conclusion that this tenuous relationship was sufficient to give rise to apparent bias would have serious implications, given that decision-makers with outside interests can rarely be isolated entirely from a much wider web of business and administrative connections.

The court was definitive on this point. Professor Mozier's client was the Fund. MAG was a different legal entity, and it was not his client. An indirect relationship between the PFMP and MAG could not by itself give rise to a conflict of interest, and no fair minded observer would think there was a real possibility of it doing so.

The second important element of the judgment is the affirmation of the general principle that the apparent bias of a single member of a decision-making body does not automatically compromise the decision of the body as a whole.

This is of particular significance in the modern public law context, in which most public bodies have been established with a corporate governance model. This means key decisions are taken collectively by a committee or board, often involving members (such as non-executives) who are appointed for their expertise and have outside interests.

The Court of Appeal's decision will be seen by many as a pragmatic one, preventing as it does the re-run of a lengthy and costly investigation because of procedural failings which, the court clearly thought, had no real effect on the Report's findings.

It is not immediately obvious that such pragmatism is the right approach. Notably, there is in other public law contexts no requirement for those bringing a procedural challenge to an administrative decision to show that departure from proper procedure impacted on the decision at hand.

However, the Court of Appeal should not be regarded as having imposed such a requirement in this case. Indeed, discussing one of the grounds of appeal which he rejected, Lord Justice Maurice Kay stated that "BAA should not be put in the position of having to prove operative effect once apparent bias has been established. That would be to blur the distinction between actual and apparent bias".

Instead, by applying the test for apparent bias to the panel, rather than its individual members, the court was able to conclude not that a procedural failure had no impact on the decision, but that (taking the panel as a whole) there was no procedural failure which gave rise to illegality.

Therefore, while Professor Mozier may have been tainted by apparent bias, unless the other panel members had been contaminated by that appearance of bias, the court considered that BAA has no grounds for a quashing of the decision.

This distinction between (on the one hand) the operative effect of apparent bias and (on the other) contamination by one panel member of the other panel members is a fine one. As the court itself was keen to stress "cases in this area are necessarily fact-sensitive".

Nonetheless, the Court of Appeal has helpfully laid down some clear lines. It has defined limits on the circumstances in which a potential conflict of interest will crystallise into apparent bias. It has also showed that a problem with one individual does not necessarily bring down the collective decision-making body.

However, in all probability this case is not yet over. There are strong indications that BAA intends to seek leave to appeal to the Supreme Court, and good arguments that the issues are of such wider importance as to merit a decision at the highest level. We await the outcome with interest.