On 4 February 2011, the UK Competition Commission (CC) published new draft guidelines on how it intends to improve its review of appeals of price control decisions by the UK telecom regulator, Ofcom. The CC is preparing for the wave of appeals that it anticipates will result from legislative changes that must be implemented by May 2011.

Main proposed changes

The main proposed changes seek to streamline the appeal process by limiting the number of written submissions and oral hearings, and within this new process to ensure that all the appellant’s arguments are set out clearly from the outset in a 'core submission'. It also seeks to rebalance the procedure so that more time is spent considering the remedies sought. Other proposed changes and recommendations include:

  • Parties to the proceedings will be limited to two or three key submissions: the core submission, a response to the CC's provisional determination, and where appropriate a submission on possible remedies. Any other input should be in response to specific CC questions.
  • CC staff will make early contact with Ofcom to better understand the models, methodologies, and assumptions underlying the price control being appealed.
  • The number of oral hearings will be limited to initial technical sessions, bilateral hearings ahead of the provisional determination and, as appropriate, a multi-party remedies conference.
  • The CC will continue to issue a provisional determination to which the parties are invited to respond, both to enable it to produce a more robust final report and to provide a starting point for a discussion of remedies.
  • More time to be devoted to the discussion of remedies at an early stage, by including this in the core submission and by initiating earlier internal consideration. Cases should aim to reach a provisional determination by week 14 to 16, allowing around eight weeks for the remedies phase.
  • A multi-party remedies conference will be held around week 18 to 22 where appropriate, to assist the CC's final decision making.  

Interested parties are invited to comment on these draft guidelines by 4 March 2011.

Background

The Communications Act gives Ofcom the power to impose various kinds of specific condition on communications providers, including conditions on operators that Ofcom has determined to have significant market power, so-called 'SMP conditions', including price controls.

The Act provides that such price controls can be challenged on appeal to the Competition Appeal Tribunal (CAT) but requires the CAT refer any price control matter to the CC. The CC must determine the reference made by the CAT in accordance with any directions given by the CAT, using such procedures as the CC considers appropriate.

So far, the CC has dealt with five telecoms price control appeals, including cases regarding price controls for leased lines (Cable & Wireless), wholesale line rentals (The Carphone Warehouse Group I), metallic path facilities (The Carphone Warehouse Group II), and two cases on mobile termination charges (Hutchison 3G UK Limited / British Telecommunications plc).

New provisions are likely to come into force by 26 May 2011, to implement new EU directive 2009/140/EC in the UK. These changes are likely to lead to future price controls being imposed and a new wave of appeals.

Conclusion

According to the UK government "a more narrowly focused appeal [procedure] than that currently employed is better suited to the new regulatory environment where, due to the changes being put in place under the revised framework, the certainty and timeliness of decision making will be even more important that under the current regime". Whether the CC's proposed changes meet these expectations remain to be seen.