Pursuer: Lake QC; MacRoberts LLP

Defender: Carmichael; Brodies LLP

21 April 2011

[1] Arriva Scotland West Limited ("Arriva") sought interim interdict against the defenders, Glasgow Airport Limited ("GAL"), from taking steps to prevent any of Arriva's vehicles used to provide bus services that were registered with the Traffic Commissioner for Scotland from having access to the public transport zone of Glasgow Airport as depicted in No.6/26 of process for the purposes of providing such services. The hearing took place on 23 and 24 December 2010. I delivered a brief extempore opinion on 24 December 2010. I was later asked to provide a more detailed note of my decision. This is that note.

The factual background

[2] Arriva operated a bus service from Glasgow Airport to the Buchanan Street Bus Station in Glasgow under the trademarked name of "Glasgow Flyer" with the service number of 500. This was one of several bus services from the airport to Glasgow City centre but it was the most direct one. Arriva purchased a fleet of ten buses, at a cost of about £1.5 million, to serve the route and employed thirty drivers on the service. The drivers were given additional training in customer service skills in recognition of the status of the service. Arriva also operated bus services on other routes to and from the airport.

[3] After terrorist attacks on Glasgow Airport, GAL restricted access to the road immediately adjacent to the terminal. The restricted area is known as the public transport zone ("PTZ"). All operators using the PTZ were required to pay a fee to GAL for each use by one of their vehicles and access to the PTZ was controlled by vehicle registration plate recognition equipment. Arriva operated the "Glasgow Flyer" service from stance 1 in the PTZ which is the stance closest to the arrival halls in the terminal building. Other services operated by Arriva used stances 6, 7 and 9.

[4] In May 2010 GAL issued an invitation to tender for the right to use bus stances at the airport to provide a bus service to and from Glasgow City centre with effect from 1 January 2011. Arriva submitted a tender on 18 May 2010. Arriva averred that during the tender process it had enquired whether the company making the successful tender would have an exclusive right to operate bus services from the PTZ to Glasgow City centre. GAL had responded that that was not intended and that it did not see a way in which it could do that.

[4] Arriva did not win the tendering process and GAL awarded the contract to First Group plc, which operated the First Bus service. Arriva in its summons attacked the evaluation process, asserting that GAL had applied arbitrary scores in relation to timetable flexibility to Arriva's disadvantage and that total scores did not reflect the correct addition of the scores.

[5] On 7 September 2010 Arriva asked GAL for an allocation of a stance within the PTZ other than stance 1 from which it could operate a bus service to Glasgow City centre after 1 January 2011. GAL responded by letter dated 17 September stating that Arriva could not operate its 500 service from the PTZ. After a meeting and further correspondence in which Arriva raised a question whether there had been compliance with the Competition Act 1998, GAL by letter dated 12 October 2010 stated that Arriva could operate its service to Glasgow City centre from the coach park on Bute Road. By letter dated 22 October 2010, GAL stated that, if Arriva attempted to operate a bus service to Glasgow City centre from any of the stances in the PTZ after 1 January 2011, its vehicles would be prevented from entering the PTZ.

[6] Arriva averred that there was space within the PTZ to accommodate its service to Glasgow City centre in addition to the direct service, which First Group was to provide to Glasgow City centre, and also the bus services on other routes. GAL challenged this assertion.

[7] Arriva averred that it wished to continue to operate its service to Glasgow City centre and was prepared to pay the standard departure fee for access to the PTZ. It asserted that a stance within the PTZ was an essential facility for any bus operator providing regular timetabled services from the airport.

Arriva's application for interim interdict
[8] Mr Lake QC for Arriva submitted that the provision of access to the PTZ in return for payment constituted a market within the meaning of section 18 of the Competition Act 1998. GAL occupied a dominant position in that market which it was abusing by excluding Arriva from the PTZ. As Arriva would not be able to operate the service to Glasgow City centre except from a stance in the PTZ, the decision by GAL to exclude it from the PTZ affected trade in the market of the provision of bus services from the airport to Glasgow City centre.

[9] In arguing that there had been a breach of section 18 of the Competition Act 1998 Mr Lake referred me to section 60 of that Act and to Articles 3 and 82 of the EC Treaty. He cited the following decision of the European Commission and case law of the Court of Justice of the European Communities: KLM Royal Dutch Airlines NV v Flughafen Frankfurt/Main AG [1998] 4 CMLR 779, Commercial Solvents Corporation v Commission [1974] ECR 223, RTE v Commission [1995] ECR I-743, Tetra Pak International SA v Commission [1996] ECR I-5951 and Oscar Bronner GmbH & Co KG v Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co KG [1998] ECR I-7791. He also referred to the Commission Notice on the Application of the Competition Rules to Access Agreements in the Telecommunications Sector (1998) OJ C265/02 and to the Scottish case of PIK Facilities Ltd v Watson's Air Park Ltd 2005 SLT 1041.

[10] In short, he submitted that GAL's abuse of its dominant position in the market for access to the PTZ prevented effective competition in the related downstream market for the provision of bus services to and from the airport. An alternative analysis was that GAL had abused its position by refusing Arriva access to an essential facility. In either case, GAL had failed to provide objective justification for Arriva's exclusion from the PTZ.

[11] Mr Lake submitted that the balance of convenience favoured the grant of interim interdict. If Arriva were excluded from the PTZ it would not be able to operate a viable bus service and would have to make some of its employees redundant. It would be difficult to recruit suitably trained staff if interdict were granted in future. Arriva would suffer loss of reputation. There was a risk that the Traffic Commissioner for Scotland would impose a substantial fine on Arriva or curtail its licence to operate bus services if it failed to provide a service for which it was registered. Arriva would also lose its investment in specially commissioned buses to operate the service. By contrast GAL would suffer no prejudice if Arriva were allowed to offer a service to compete with that which First Group would operate from stance 1. He argued that it would be difficult to quantify Arriva's losses and that damages were not an adequate remedy. Arriva's parent company, which controlled a substantial UK bus group, would undertake to meet any damages claim against Arriva should the interim interdict be recalled after a substantive hearing on the merits.

[11] Ms Carmichael for GAL sought to correct certain factual assertions. The controls for entry into the PTZ were located before the Bute Road bus stances. Those bus stances were 130 metres from the front of the international arrivals hall and 335 metres from the domestic arrivals hall. GAL had never insisted in exclusivity in the provision of services to Glasgow City centre; there were several routes in operation. Arriva had enjoyed exclusivity in relation to its direct route but had all along been aware that the concession was time limited. Unlike other routes to and from the airport where there was no competition, there had been five operators who wanted to operate the direct route to and from the City centre and there was insufficient capacity at the airport to allow all five to compete. Accordingly GAL held a commercial tendering process. GAL had offered Arriva a stance for its service at the Bute Road bus park which could be reached by a covered walkway from the terminal.

[12] She disputed the assertion that access to the PTZ was a market; it was merely a facility. She referred to the Commission Notice on the definition of relevant market for the purposes of Community competition law OJ C97/372/03. Arriva's case, like that of the car park operator in PIK Facilities Ltd, suffered from a lack of definition of the market, which in this case was the alleged downstream market. In contrast with Frankfurt Airport, Commercial Solvents, RTE and Tetra Pak, GAL was not in competition in a downstream, derivative or related market, in this case for the provision of bus services. The best that could be said for Arriva's case was that the PTZ was an essential facility. If so, Arriva had to meet the very high test of indispensability: Bronner, the Advocate General at paragraph 47. On the information available it could not be asserted that the use of a stance immediately outside the terminal was indispensable to the carriage of the public to and from the City centre. It was not enough to say that what was offered was less advantageous: IMS Health GmbH & Co OHG v NDC Health GmbH & Co KG [2004] 4 CMLR 28, at paragraph 28. Further, there was objective justification for GAL's actions: there was insufficient capacity in the PTZ to accommodate five competing operators on the same route. GAL promoted a variety of bus routes to and from the airport and needed to retain capacity for those other routes in the stances close to the terminal. As a result GAL had never countenanced competition from those stances on the same route and required a tendering process when more than one operator expressed an interest in a particular route.

[13] In relation to the balance of convenience, Arriva had had no cause to believe that it would have access to a stance in front of the terminal from 1 January 2011; the concession, which gave it access to stance 1, had been always been subject to a period of notice. Its investment in employees and buses occurred in the context of that commercial risk. Any difficulty which Arriva might have with the Traffic Commissioner was of its own making as it could have given timely notice of any change to its routes when it lost the tendering process. Arriva had at most a weak prima facie case. It would disrupt the organisation of the stances if Arriva were allowed access without regulation of the space and without licence. First Group plc had been awarded the route and was due to commence the service within eight days. GAL's commercial relations with First Group plc would be damaged and there would be a risk of legal action for misrepresentation if interim interdict were pronounced. A right to claim damages from Arriva's parent company would not compensate GAL for the disruption of its commercial relations.

[14] In reply Mr Lake challenged the idea that there was simply one direct service to the City centre. He suggested that Arriva's 500 route was in competition with First Group's 747 route to the City centre via Partick and the Glasgow Conference Centre. The market which he identified was that of routes from stances in the PTZ to the City centre. More than one of the operators, which bid for the route, had not been aware that they were bidding for an exclusive right. There was no objective justification for rationing the provision of services on the most popular route to one operator and thus creating a monopoly. He challenged the assertion that there was insufficient capacity within the PTZ to accommodate First Bus, Arriva and the other operators who bid for the service without squeezing out other services. Arriva could use its stances in the PTZ which served other routes also to serve the City centre route.

Discussion

[15] I accepted that Arriva had averred an arguable case of the breach of competition law, namely the abuse of a dominant position under section 18 of the Competition Act 1998. Two bases were put forward. First, it was said that the defenders were dominant in the market for provision of stances for public transport vehicles at the airport and use of that dominant position had a distorting effect on the downstream market for the provision of bus services to the city centre of Glasgow which is the related and distinct market. See the KLM and Commercial Solvents cases. Secondly, Arriva's case was put on the basis of the provision by the defenders of essential facilities there in line with the Bronner case. The fact that Glasgow Airport was not in competition with Arriva in the downstream market for bus services might not exclude the operation of the competition rules, particularly if the "essential facilities" doctrine applied. In relation to the first basis, the possession of a property right did not entitle one to abuse a dominant position. It was a defence against the charge of abuse to show that there was an objective necessity for the extension of a dominant position into a downstream market: KLM Royal Dutch Airlines. But GAL did not seek to enter the market for the provision of bus services to Glasgow City centre. In relation to the "essential facilities" doctrine, the court articulated three criteria in Bronner. First, an action might amount to an abuse of a dominant position if it eliminated all competition on the part of the person requesting access to the essential facility. It appeared that all routes to the city centre could compete with each other to some extent but it also appeared that under the post 1 January 2011 arrangements the same company would provide each of those bus services from the PTZ while Arriva was excluded from the PTZ. The second criterion was that the refusal of access to an essential facility without objective justification was an abuse of a dominant position and I will say more about that when I discuss the balance of convenience. Thirdly, the service of which Arriva was to be deprived must be indispensable to the carrying on of its business. Arriva's assertion was that the offer of use of the Bute Road stance was not an actual or potential substitute. But Arriva provided other bus services from the airport and might have sought access to the PTZ to provide a service to the City centre by another route. In my opinion the application of the criterion of indispensability in this case will need to be clarified in a substantive hearing.

[16] While Arriva had stated an arguable case, I considered that, as a general rule, the complex question of mixed fact and law, which an allegation of breach of section 18 of the Competition Act 1998 entails, was better determined after evidence rather than on counsel's submissions in an application for interim interdict. It would in my view require a clear-cut case of abuse of dominant position to justify interim interdict without detailed consideration of evidence. A case, which arguably depended upon an extension of existing European case law to cover the circumstance in which (a) the entity accused of abusing its dominant position in the upstream market was not competing in the downstream market and (b) there was no question of the restrictive use of a property right or facility preventing the emergence of a new service for which there was a potential consumer demand and which differed from the service already provided, was not of itself a strong prima facie case. In relation to the latter consideration, see the judgements of the court in Bronner, at paragraph 40, and IMS Health, at paragraph 49.

[17] Turning to the balance of convenience a number of factors were raised by the parties. Those which were of most weight in my opinion were the following. The first four were in Arriva's favour. One was that it was using 10 buses and 30 specifically trained employees and I accepted Mr Lake's assertion that it would not be simple to recreate that service if at the end of the case the court were to pronounce the interdict which Arriva sought. Secondly, there was the potential for possible restriction of competition and resulting disadvantage to consumers. Thirdly, there was no immediate major disadvantage to GAL as Arriva would provide services as at present without interfering with the use of stance 1 by First Bus. Fourthly, it appeared that Arriva's parent company had the resources to meet any damages award if an interim interdict were eventually held to be wrongful.

[18] But there were other factors which pointed against the grant of interim interdict. Thus, fifthly, I accepted there was an arguable case but I did not accept that the prima facie case was compelling. See paragraph [16] above. In addition, GAL pleaded objective justification on the ground of capacity and the Court could not adjudicate on that issue based on ex parte statements. GAL was entitled to promote a number of bus routes from the airport to various locations and the restriction of competition for some popular routes might be justified by having regard to capacity constraints if they existed. If there were such constraints, the presence within the PTZ of buses of different operators who were competing directly on the same route might adversely affect the provision of public transport between the airport and other locations. I was not persuaded in this regard that Arriva had made out a case of discrimination. The issue seemed to me to be whether GAL had unnecessarily and without justification created a monopoly and in that regard the issue of the capacity of the PTZ might be of considerable importance.

[19] Sixthly, what carried significant weight was the consideration that in principle some restriction on the use of stances by competitors on one particularly popular route was probably justified as otherwise it is unlikely that all five operators competing for that route could do so successfully from the PTZ without squeezing out other bus services. GAL represented if it had been wrong in its conduct of the bidding process and if it should have allowed two operators to compete on the particular direct route to the city centre, the runner-up of the tender process was not Arriva. Thus if GAL were in breach of competition policy, the effect of the interim interdict would be to allow Arriva to leap over bidders who beat it in the tender process.

[20] Seventhly, I took account of the offer of the stance at the Bute Road bus park and its proximity to the international arrivals hall. I recognised there was a dispute as to whether it was an adequate substitute, although it was admittedly less advantageous than the presence of Arriva's buses at a stance within the PTZ. It also seemed to me that there might be scope for discussion between the parties to achieve an interim arrangement pending resolution of the dispute on the merits of Arriva's competition law case.

[21] I was also aware that damages were often not a satisfactory remedy for commercial disruption and that it was frequently very difficult for a claimant to quantify his loss. But in this case both parties could found on that consideration. If interim interdict were refused, Arriva might have difficulty in calculating its losses; but if interim interdict were pronounced and it was later found to be unjustified, GAL and, at least potentially, affected commercial bus operators might have similar difficulties.

[22] In weighing up the considerations as best as I could in the balance of convenience I was not persuaded that it was appropriate in this case to grant interim interdict. I therefore refused Arriva's motion and granted GAL its expenses occasioned by the motion.