Flybe Ltd: alleged abuse of a dominant position

Office of Fair Trading (OFT) closed Competition Act 1998 case.

• From: Competition and Markets Authority
• Published: 5 November 2010

• Case type: CA98 and civil cartels
• Case state: Closed
• Market sector: Transport
• Outcome: CA98 - no grounds for action
• Opened: 1 March 2009
• Closed: 5 November 2010

Summary

Following a complaint from Air Southwest in 2009, the OFT opened an investigation under Chapter II of the Competition Act 1998 and/or Article 102 of the Treaty on the Functioning of the European Union into alleged predatory entry by Flybe on the Newquay to London Gatwick route, in competition with Air Southwest's operations on its Plymouth to Newquay to Gatwick route.

The OFT is called on to decide whether Flybe's entry on to the Newquay to London Gatwick route in competition with Air Southwest amounts to predation, aimed at driving Air Southwest out of either the Plymouth to Newquay to London Gatwick route or at eliminating ASW as a competitor at Plymouth Airport more widely.

Following careful assessment of all of the evidence at its disposal, the OFT considers that it does not have sufficient evidence to support a finding that Flybe's conduct amounts to predation on the Newquay to London Gatwick route, designed to eliminate ASW from the route, or, more widely, to undermine ASW's operations at Plymouth Airport in order to eliminate ASW as a competitor at Plymouth Airport. Therefore, the OFT concludes that it has no grounds to take action against Flybe. This conclusion is founded on:

• the fact that the OFT considers that Flybe is not dominant on a relevant market covering the Newquay to London Gatwick route and is only dominant on two other small scale markets (Exeter to Guernsey and Exeter to Jersey)

• evidence indicating that the links between the two small scale markets, in which the OFT considers Flybe is dominant, and the Newquay to London Gatwick market, in which the OFT considers Flybe is not dominant, were limited and may not be sufficiently proximate to support a related-market abuse in this case

• the absence of factors indicating that Flybe's entry on to the Newquay to London Gatwick route marked a departure from normal, albeit robust, competition in the particular circumstances of this case

• the absence of sufficient evidence that Flybe's intentions were predatory and not part of a normal and competitive strategy.

The OFT’s full reasoning for its conclusion is set out in its decision:

• Decision regarding alleged abuse of a dominant position by Flybe Limited (pdf 845kb)

• Annexe A - Market definition catchment profile analysis and event study (pdf 442kb)

• Annexe B - Analysis of costs and revenues (pdf 470kb)

Reference number: MPINF-PSWA001

Published 5 November 2010