UK - Major Canadian and British funds are understood to be one step closer in their rivalry to purchase London's Gatwick airport after the Competition Commission ordered the British Airports Authority (BAA) to sell three of its airports within the next two years.

The Competition Commission announced its final decision at the end of March and said separating BAA's airports - Gatwick and Stansted and either Edinburgh or Glasgow - under different ownerships was the only way to address the lack of competition, improve the quality of service and speed up investment spending in the airports for passengers and airlines.

Christopher Clarke, chairman of the BAA Airports inquiry, said: "We recognise that in using our powers in this way, we will have a significant impact on BAA's business. However, given the nature and scale of the competition problems we have found, we do not consider that alternative measures, such as the sale of only one of the London airports or greater regulation, will suffice."

BAA, which is partly owned by Caisse de dépôt et placement du Québec, put Gatwick airport up for sale last year and hopes to sell it this year.

Ontario Teachers' Pension Plan, the Canada Pension Plan Investment Board (CPPIB) and Borealis, the infrastructure branch of the Ontario Municipal Employees Retirement System (OMERS), are all reportedly participating in consortiums bidding for Gatwick airport, which is hoped to sell for around £2bn (€2.1bn).

The three consortiums still in the running for Gatwick include Global Infrastructure Partners, Lysander Investment Group and Manchester Airport Group.

The Manchester Group is understood to have called on one of its key investors, the Greater Manchester Pension Fund, to get involved in the deal to buy Gatwick, though officials at GMPF were unavailable for comment at the time of publication.

A consortium made up of the Ontario Teachers' Pension Plan, the Canada Pension Plan and 3i Group withdrew their offer last month, saying the price tag was too high.

Final bids for Gatwick airport were originally due 31 March 2009, however, the Competition Commission has extended the deadline until the end of April 2009.

The Competition Commission published a report in august 2008 revealing competition problems at BAA's seven UK airports - Heathrow, Gatwick, Stansted, Southampton, Edinburgh, Glasgow and Aberdeen.

The report said BAA's common ownership was the main cause, but also argued there were also problems stemming from the regulatory system and government policy.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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