Heathrow to pay £1.5m over car park price probe
HEATHROW Airport has been ordered to pay a £1.6 million settlement over a car park pricing scandal at Sofitel Terminal 5.
The Competition and Markets Authority (CMA) imposed the hefty fine on the airport, after an investigation into its agreement with Arora Group over parking at the Sofitel.
Under the agreement, Arora Group could not charge non-hotel guests less for parking than other car parks on the airport’s grounds.
Both Heathrow and Arora Group were provisionally found to have breached competition laws and accepted responsibility, with Heathrow agreeing a £1.6m settlement on Tuesday September 18.
The settlement could have been as high as £2m, but a discount of 20% was granted as the airport voluntarily entered into the settlement.
Heathrow Airport Ltd and Arora Group have removed the clause and other airports have been warned to avoid similar agreements with leaseholders.
A spokeswoman for Heathrow Airport Ltd said: “Today it has been announced that we have agreed to settle a case with the Competition and Markets Authority (the CMA) in relation to a breach of competition law. We have cooperated fully with the CMA throughout its investigation, reflecting our clear and unequivocal commitment to competition law compliance.
“The CMA has found that the Arora Group and the company were parties to an anti-competitive agreement concluded in 2005. This revolved around a historically negotiated provision which pre-dates our current management and shareholders.
“The matter relates to the price that Sofitel could charge for a very small proportion of the car parking offered at that hotel.
“We believe that the provision was never monitored or enforced and, as such, there would have been no impact on Heathrow’s customers or the Sofitel.
“However, we recognise that the company and the Arora Group should not have agreed the provision back in 2005 and we accept the CMA’s settlement fine of £1.6m.”
The Sofitel is attached to Terminal 5 and was the Arora Group’s first hotel built on Heathrow Airport grounds. The group also owns The Renaissance London Heathrow and Holiday Inn London Heathrow T5.
The group is also constructing a Crowne Plaza and Holiday Inn Express at Terminal 4, due to open later this year, and a hotel connected to Terminal 2.
The group’s owner Surinder Arora started at the age of 16 as a baggage handler at Heathrow before working his way to an estimated £800m hotel and property empire by the age of 60.
The tycoon has even developed multiple alternative plans for airport expansion, which he claims will come in cheaper, quicker and are backed by the airlines working at Heathrow. Ann Pope, the CMA’s senior director for antitrust, said: “Airport car parking charges are paid by millions of people and any agreements to restrict price competition are not acceptable. “Competition law applies to land agreements at airport car parks in the same way as any other type of business arrangement.
“This fine should act as a strong warning to all companies that the CMA will take action to make sure businesses are free to compete on price.”
A spokeswoman for the Arora Group commented: “Having brought this matter forward to the CMA, and co-operated with them throughout, the Arora Group is pleased that this investigation is entering its final stages.
“The Arora Group takes compliance with all laws and regulations very seriously and respects the CMA and the process it followed.
“Arora welcomes all increases in open, fair and transparent competition at Heathrow, particularly in terms of pricing at the airport, not only because it’s good for local businesses and operators, but also because we feel it is more likely to lead to a better experience for passengers.”
This fine should act as a strong warning to all companies that the CMA will take action
Ann Pope, senior director for anti-trust at CMA
Sofitel is linked to Terminal 5 at Heathrow, but was unable to charge less for car parking than other airports at Heathrow