57.Section 7 empowers the CAA to determine whether or not the market power test is met in relation to an airport area whenever it considers it appropriate to do so. This is defined as a “market power determination”.
58.In order to comply with European law (Directive 2009/12/EC of the European Parliament and of the Council of 11 March 2009 on airport charges), this section also requires the CAA to determine whether the market power test is met in relation to an airport area in certain specified circumstances and if requested by certain specified people. Those specified circumstances are listed in subsection (2) and the exceptions to this are listed in subsection (5).
59.When a request is made for a market power determination in respect of an airport area, the CAA is empowered to treat that request as if it were a number of requests in respect of a number of airport areas that consist of or include that area. Or it could consider an area including, but wider than, the area for which the request is made. For example, if someone requested a market power determination in relation to an area which comprises the entire airport and there is more than one operator at that airport, the CAA would need to consider the areas managed by the different operators separately.
60.Subsection (7) states that the CAA should have regard to the market(s) in which the operator has substantial market power (test A) when choosing the airport area that is to be the subject of a market power determination. The following simple example illustrates what is meant here. Imagine the CAA concluded that the operator was dominant in the provision of runways, but not in the provision of passenger terminals. In such circumstances subsection (7) would not prohibit the CAA from making a market power determination in relation to an area that included the passenger terminals, but it does mean that the CAA would need good reasons for doing so.