Arriva the Shires Ltd v London Luton Airport Operations Ltd

A dominant undertaking may abuse its position by distorting competition in a downstream market even where it does not itself operate in that market. A commercial interest in downstream revenue is relevant but is not legally essential. Exclusive access rights granted to one downstream operator may be abusive where they create serious barriers to entry and materially distort competition. Objective justification requires more than a rational commercial choice. The dominant undertaking must establish a genuine necessity for the restriction and show that no less restrictive solution is available. A tender process may itself constitute an abuse, but defects must also cause the claimant loss. A contractual exclusivity arrangement was abusive where it lasted beyond foreseeable capacity constraints, protected the incumbent from competition, granted an unjustified right of first refusal and discriminated in favour of another operator.

Arriva The Shires Ltd operated a coach service between Luton Airport and London Victoria under an expiring concession. London Luton Airport Operations Ltd, which controlled access to the Airport’s bus facilities, conducted an informal bidding process. National Express obtained a seven-year concession containing exclusivity provisions, a right of first refusal over new London services and an exception for easyBus.

Arriva alleged that the tender process and the terms of the new concession amounted to abuses of a dominant position contrary to section 18 of the Competition Act 1998. The parties agreed that dominance would be assumed for trial purposes. The issues were whether the tender was unfair, whether the concession distorted downstream competition, whether the different treatment of easyBus was unlawful discrimination, and whether the restrictions were objectively justified by congestion, safety or the possible use of the facilities for other services.

1. Tender process. The invitation to Arriva was genuine. Although the process was informal and some aspects were less than fair, Arriva’s bid was substantially less favourable than the competing bids. Any defects therefore did not cause the loss necessary to complete the private cause of action. This allegation failed.
2. Downstream competition. Applying the objective concept of abuse under Article 102 TFEU and section 60 of the Competition Act 1998, the court held that downstream foreclosure may be abusive even where the dominant undertaking is not itself a downstream operator. London Luton Airport Operations shared in downstream revenue through percentage fees and minimum guaranteed payments, but such a commercial interest was not legally essential. The seven-year exclusivity materially restricted entry and distorted competition between coach operators. Competition from rail services and Arriva’s continued operation from the Rail Interchange did not remove that distortion.
3. Aggravating contractual terms. The exclusivity extended beyond the anticipated redevelopment of the bus station and protected National Express from present and future competition. The right of first refusal was intended to prevent customer diversion and was not objectively justified. The easyBus exception went beyond what was required to honour its existing concession and unjustifiably placed other operators at a competitive disadvantage under section 18(1)(c).
4. Objective justification. The burden rested on London Luton Airport Operations once justification was raised. The appropriate inquiry is fact-sensitive, but a merely rational commercial decision is insufficient where the conduct is otherwise anti-competitive. Congestion and safety were not established: the evidence showed that the existing bus station could accommodate another service, and more efficient management would create further capacity. The proposed use of other terminal areas would have disrupted existing services, but that did not justify the exclusivity. Reserving space for a possible different destination was unsupported by the evidence.
5. Disposition. The tender allegation failed. The terms of the new concession constituted an abuse. Issues concerning dominance, injunctions, damages and further relief were left for later determination.