A £1.6 million fine has been imposed on Heathrow for restricting competition on car parking prices.

The penalty follows a Competition and Markets Authority probe into the airport’s agreement with the Arora Group for the lease of Arora’s Sofitel hotel at Terminal 5.

This included a clause restricting how parking prices should be set by Arora for non-hotel guests.

The CMA investigated whether the pricing restriction prevented the Arora Group from charging non-hotel guests cheaper prices than those offered at other car parks at the airport.

The authority has provisionally found that Heathrow and Arora Group breached competition law.

Both parties have formally accepted that this was a breach of competition law and have removed the pricing restriction, with Heathrow agreeing to settle the case and pay a £1.6 million fine, the CMA revealed.

Heathrow’s fine was reduced by 20% from £2 million to £1.6 million because the airport voluntarily entered into settlement with the CMA.

Arora Group will not be fined, as it was granted immunity for coming forward under the CMA’s leniency programme.

The programme is designed to encourage companies to co-operate if they think they might be involved in wrong-doing.

The CMA has sent warning letters to other airports and hotel companies warning against similar anti-competitive agreements.

This is the first time the CMA has taken competition law enforcement action in a case involving a land agreement.

CMA senior director for antitrust, Ann Pope 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.”

The Civil Aviation Authority assisted the CMA with the investigation.

Director of consumers and markets Paul Smith said: “We welcome today’s announcement. This investigation is a good example of competition authorities working together to crack down on anti-competitive agreements that risk disadvantaging consumers.

“It also reminds the airport industry and those managing airport parking to ensure that their commercial agreements are compliant with competition law.”