The UK Department of Business Innovation and Skills (BIS) is soon expected to publish the results of its consultation into the options for reform of Regulatory and Competition Appeals. Its consultation (available here), published in June of last year, proposed an overhaul of the way regulatory appeals are handled.
The proposals suggested by BIS applied to all the steps in the appeals process, including the initial incentives on firms to launch an appeal, the grounds on which an appeal is heard, the body which hears the appeal and options for streamlining the process for conducting appeals.
The consultation took a broad look across appeals of all regulatory and competition decisions made by the Office of Fair Trading, the Competition Commission and sector regulators exercising concurrent competition powers, as well as reviews and appeals of economic regulatory decisions including those made by Ofwat.
The consultation asked for respondents’ views on 48 separate questions and proposals. An overview of some of the key changes consulted upon is as follows:
- Changing the standard of review for appeals under the Competition Act 1998 from appeal on the merits to a flexible judicial review, or specific, focused grounds for these appeals;
- Proposing reforms to appeal bodies, including a review of the Competition Appeal Tribunal (CAT), to increase the overall effectiveness of the system and make it easier to understand for firms and investors;
- Introducing clearer rules on the admissibility of new evidence in an appeal, and awarding costs against parties introducing new evidence which could have been introduced earlier in the decision-making stage;
- Increasing the use of confidentiality rings by regulators and/or greater transparency and more effective consultation
- Suggesting that, where successful, the regulator should be awarded its costs (unless the regulator’s conduct can be characterised as being unreasonable);
- Proposing a 6 month time limit for the CAT to reach decisions in “straightforward” cases and 12 months for all other regulatory appeals; and
- Reducing the extension available for regulatory references in the water, rail and aviation sectors from 6 months to 2 months. This would mean that in the water sector, a regulatory reference would need to be completed within a maximum period of 8 months.
BIS gave consultees from 19 June to 11 September to comment on its proposals and expects to publish the Government’s response in early 2014.
This outcome of the consultation is highly unlikely to have an impact on the ongoing PR14 process, as BIS has stated that where a periodic price review is already underway, any changes to the framework would only apply to decisions in a subsequent price review. Nor has the enactment of the Enterprise and Regulatory Reform Act 2013 brought about any substantive changes to the way in which the Competition and Markets Authority will carry out a price determination reference. For PR14, therefore, it is very much a case of ‘business as usual’.
However, the outcome of the consultation into regulatory appeals could, depending on the decisions that are made, have an impact on future price reviews in the water sector, as well as the way in which appeals against competition law infringement decisions are heard. With sector regulators required to consider the use of competition law as an enforcement tool in preference to traditional licence enforcement processes, and the CMA likely to take on a more pro-active enforcement role in the regulated sectors, this remains an important development to monitor.