LONDON: U.K.'s consumer affairs watchdog the Office of Fair Trading announced Thursday it is investigating airports operator BAA Plc., the company controlling major British airports, handling as much as 63 per cent of the country's air passengers, and which is a potential takeover target by Spanish infrastructure firm Grupo Ferrovial SA.
The investigation might lead to a referral to the Competition Commission, the OFT said.
The announcement of the investigations caused the BAA shares to fall as much as 54 pence, or 6.5 per cent, to 780 pence, which values the company at around 8.4 billion pounds.
The OFT had started preliminary investigations and will decide whether a fuller inquiry is needed or not by the end of June. It said it is looking at whether the current market structure and BAA's dominance delivers the best value for air travelers.
The OFT's chief, John Fingleton, said BAA has a high market share and it is interested in understanding whether the joint ownership of the London and Scottish airports is in consumers' interests.
Since competition in the air transport is an extremely important part of the U.K. economy, the OFT has decided to look more closely at how the airport markets work with the aim of establishing whether the current market structure delivers best value for air travelers, Fingleton added.
The investigation puts a virtual block on Ferrovial's takeover efforts.
Meanwhile, countering the takeover attempt, BAA came out with a statement saying it is worth more than 10.2 billion pounds, or 940 pence a share, in comparison to Ferrovial's offer of 810 pence a share. The company owns and operates London's Heathrow, Gatwick and Stansted airports as well as Edinburgh, Glasgow and Aberdeen airports in Scotland.
The company reiterated that it is planning to return 750 million pounds to shareholders and increase the dividend by 40 per cent.
BAA also said OFT's announcement came as a "complete surprise." It said both the Civil Aviation Authority and the Competition Commission have brought the industry under regulation ensuring that the operators did not go against the public interest.
It, however, said it will give careful consideration to the OFT's announcement and will cooperate with any enquiry.
