Babcock loses appeal against €51m Italian anti-trust fine

Babcock's Italian wing said it was now deciding on further appeal, adding that it did not understand the basis of the decision.

The Italian Competition Authority (ICA) had fined Babcock Mission Critical Services and seven other companies, in relation to a publicly available tariff list produced by a trade association of which BMCS Italy was a member.

"BMCS Italy is convinced that the tariff list never related to the helicopter emergency medical services and, indeed, this lack of relevance was explicitly stated on the front of the list from 2012, two years prior to the acquisition of BMCS Italy by Babcock in 2014," said Babcock.

"The ICA had confirmed that, whilst it had also investigated the possibility of bid-rigging arrangements relating to HEMS, no basis was found for such allegations against BMCS Italy or any other party."

Babcock noted that the ICA also imposed fines on seven other companies in respect of the tariff list produced by a trade association - of which BMCS Italy was a member.

Analysts at Liberum said the fine had been charged as a contingent liability last year, but added that Babcock had not expected to lose the appeal. However, it maintained a 'buy' status on the stock.

"We expect it to be an exceptional provision in the full year 2020 accounts. It is possible that Babcock will appeal the decision again. However, we believe that it is prudent to increase net debt in 2021 from £1.030bn to £1.053bn (2.2x EBITDA). This equates to 9p off the share price assuming that nothing was discounted."

Writing by Frank Prenesti. Editing by Michele Maatouk.