Lease of airport buildings to provider of in-flight meals – Rent of 6% of turnover including access fee – Same percentage payable by competitors located outside airport as access fee – Airport authority abolishing access fees – Lessee witholding part of rent – Whether continued insistence on turnover rent an abuse of EC competition law
On March 1 1985 the plaintiff airport authority granted a 35-year lease to the first defendant of two buildings within the perimeter of Heathrow Airport, at a rent of 6% of the turnover of the lessee’s business of supplying in-flight meals to aircraft loading at the airport. The terms included an airside access licence to allow for deliveries. At the date of the grant, similar licences had been given to five competing firms operating from premises outside the airport (the outside caterers) in respect of which a fee, also based on 6% of their business turnover fee, was charged, notwithstanding that they bore an additional accommodation cost. In January 1997 the lease was assigned to the second defendant, Alpha Holdings (UK) Ltd (Alpha). On April 1 1997, following a recommendation from the Monopolies and Mergers Commission, the plaintiff removed the charge hitherto imposed on the outside caterers, thus prompting Alpha to complain that it was now at a competitive disadvantage to the extent that the turnover-based rent exceeded the market rent. Following the breakdown of negotiations between the parties, Alpha withheld so much of the rent as it considered to be excessive. In summary proceedings by the plaintiff to recover the arrears, Alpha contended that such recovery would amount to an abuse by the plaintiff of a dominant position within the common market, contrary to article 86 of the EC Treaty. The issue before the court was whether Alpha had raised a reasonable probability of a real or bona fide defence.
Held Judgment was given for the plaintiff.
1. The plaintiff was clearly in a dominant position and was arguably capable of committing an abuse even though the competition affected was not competition with the plaintiff: see Irish Continental Group v CCI Morlaix [1995] 5 CMLR 177 and Re Zaventem Airport Landing Fees: British Midland v Belgium [1996] 4 CMLR 232. However, Alpha had failed to show that the plaintiff’s conduct was capable of influencing the structure of the market or hindering competition. Furthermore, the trade likely to be affected if at all was the purely local trade carried on by Alpha and its competitors at or near Heathrow, thus there was no possibility of affecting trade between member states: see Hugin v Commission [1979] ECR 1869.
2. There was also force in the plaintiff’s contention that insistence on performance of a lawful provision in a long term agreement could not become unlawful by reason of a change in external circumstances. However, it was unnecessary to form a view on that point.
David Anderson (instructed by Lovell White Durrant) appeared for the plaintiff; Peter Roth QC (instructed by Paisner & Co) appeared for the defendants.
