Wednesday's ruling is the latest twist in a long battle between BAA and the Competition Commission CC.L stretching back to 2009 when it ruled that the group exerted a dominant hold on airports in Scotland and the southeast of England.

Late last year the CC ordered BAA to sell one of its Scottish airports before it disposes of Stansted airport, which is located about 60 kilometres northeast of London.

BAA, owned by Spanish infrastructure group Ferrovial (FER.MC), put Edinburgh airport up for sale in October 2011, but asked for a judicial review of the ruling on Stansted.

BAA's appeal was dismissed on Wednesday after a judicial review by Britain's Competition Appeal Tribunal CAT.L.

"Whilst BAA is of course entitled to explore the available avenues for challenge, it is now surely time for BAA to accept our findings and proceed with the necessary divestments," Said Laura Carstensen, a member of the original CC inquiry in 2009.

"BAA is in the process of selling Edinburgh airport following our ruling. We will now press ahead to ensure that this is followed promptly by the sale of Stansted airport, to the benefit of passengers and airlines."

BAA owns London's Heathrow, Europe's busiest airport, as well as Southampton and Stansted in England, plus Glasgow, Edinburgh and Aberdeen airports in Scotland.

Stansted handled 18 million passengers in 2011, with 550 aircraft movements a day.

The airport operator has already sold London's Gatwick, the country's second largest airport, to Global Infrastructure Partners for 1.5 billion pounds in 2009 as part of the CC's original ruling.

BAA believes being forced to sell the other airports is unfair because the prevailing economic conditions mean they will not fetch a fair price and because the airports market in the southeast of England has changed.

"We are disappointed by the decision of the CAT, which we will now carefully consider before making any further statements," BAA said.

BAA's CEO Colin Matthews last year told Reuters that Stansted could fetch up to 1.2 billion pounds, but most analysts expect it to fetch around half that.

Shares in Ferrovial were up 0.3 percent at 9.28 euros at 1245 GMT, valuing it at 6.6 billion euros, underperforming Spain's blue-chip Ibex 35 index, which was up 1.35 percent.

(Editing by Matt Scuffham)

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