A competition ruling forcing BAA to sell airports was "riven" with the appearance of bias, the group told an appeal hearing Monday, even as talks continued on the sale of London Gatwick, Britain's second-biggest airport.
BAA, majority owned by Spanish infrastructure company Ferrovial, was ordered by Britain's Competition Commission in March to sell London's Gatwick and Stansted, as well as either Edinburgh or Glasgow airports.
BAA's lawyer Nicholas Green told an appeals tribunal the process was "riven through" with the appearance of bias, which he described as "acute and intolerable", because Professor Peter Moizer, a member of the original commission inquiry, advised a consortium bidding for Gatwick.
Moizer advises the Greater Manchester Pension Fund, part of a consortium with Manchester Airports Group and Borealis that was vying with Global Infrastructure Partners (GIP), a fund founded by Credit Suisse and General Electric, to buy Gatwick.
"Manchester Airports Group's money is under his control and advice," Green told the appeal.
Moizer was not available to comment.
A Competition Commission spokesman said he did not want to comment before its submissions to the court on Tuesday.
IN TALKS
BAA put Gatwick up for sale more than a year ago to pre-empt the competition ruling.
The sale has struggled as the financial crisis dented passenger numbers and made it tough for bidders to obtain debt financing, but earlier this month sources familiar with the matter said GIP was close to striking a deal.
On Monday representatives of Ferrovial and GIP were locked in talks, a person familiar with the matter said, adding a sale could be agreed within days but price remained the key stumbling block.
Ferrovial and GIP could attempt to bridge the price gap by varying the debt and cash transferred to a standalone Gatwick, or by including "earn-out" payments contingent on future performance, other people close to the matter said.
BAA spokesman Malcolm Robertson said: "We remain in discussions with a number of bidders. We are working to no specific deadline and no transaction has been agreed with any party."
BAA lawyer Green told the hearing BAA was also appealing on the grounds the Commission did not take into account the cost of its ruling. "The issue is why they failed to conduct this analysis, what were the reasons and whether they were justified," he said.
The hearing continues until Wednesday, when Ireland's Ryanair is also expected to make a submission. The tribunal is expected to rule in about two months' time.
