This was the provocative question posed in the "UK Economic Regulators" report published by the House of Lords select committee on regulators on 13 November.
As well as considering in general terms how well the UK's economic regulators were getting along with the competition authorities, the report also considered the effectiveness of the concurrency arrangements, i.e., the regime under which UK competition law investigation and enforcement powers are presently shared out between the OFT and the various sectoral regulators (such as Ofgem, Ofwat and CAA). The committee noted that this regime can make effective use of the sectoral regulators’ specialist knowledge of the particular sectors they regulate, and assist in co-ordinating the use of sector-specific regulation with the exercise of general competition law.
Whilst the committee noted (as have others in the past) that the regime had the potential to lead to uncertainty for the regulated companies and that there could be inconsistencies in dealing with competition matters across the different regulated sectors, on the whole, it concluded that the concurrency arrangements were working satisfactorily and should be retained. In coming to that view the committee echoed the conclusions of the joint DTI/Treasury report on concurrency published in May last year.
The committee did, however, add two 'riders' to its conclusions which may, if acted upon, have a considerable impact in certain regulated sectors.
First, the committee pointed out that, in some cases complainants perceive that a sectoral regulator is so deeply involved in regulating the industry as it stands that it pays insufficient attention to the importance of establishing and maintaining effective competition. In this respect the report drew particular attention to Ofwat, whose apparent failure to promote new entry in the England & Wales water market (despite its Competition Act and Water Act powers) has been widely criticised (including by the Competition Appeal Tribunal). The committee recommended that, in order to address such concerns, complainants should therefore be given the option of requesting the OFT rather than the sectoral regulator, to take the lead in investigating competition law breaches.
Second, the committee noted that there was a case for giving concurrent powers to regulators which presently do not have them, even though they are carrying out very similar functions to regulators which do. In that regard, it mentioned the position of both Postcomm and (in respect of airports) CAA. These areas are currently covered by 'memoranda of understanding' between the relevant regulator and the OFT and, according to Postcomm at least, this form of cooperation appears to obviate the need for formal concurrency powers. The CAA, however, has made a case for full concurrency.
In addition to its observations on concurrency, the committee also made a number of other interesting observations and recommendations of relevance to sectoral regulators and the promotion of effective competition. Of particular interest (not least to the Competition Commission's forward planning team) is the suggestion that, where possible, utility regulators should look to bring more cases to the competition authorities and that the regulators should work to ensure that the cases most likely to establish useful precedents are brought to the Competition Commission.