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Print articleThe CAT Sharpens its Claws (Floe Telecom Limited /Albion Water)
February, 2007 - Sebastian McMichael
The CAT has confirmed, with the Court of Appeal's blessing, that it will not only srcutinise a regulator's decision but that it will also, in certain cases, substitute the regulator's decision with that of its own without remitting the case back to the regulator for a second bite at the cherry.The CAT's approach offers possibilities for both a complainant and for those companies subject to regulatory investigation.
There have been a growing number of cases where the CAT has stepped in and scrutinised regulatory decisions. In Claymore Dairies (September, 2005), the CAT required the OFT "tae think again" in rejecting a complaint by Express Dairies that Wiseman was acting anti-competitively in the Scottish milk market. The CAT felt that the OFT had failed to state adequate reasons for rejecting the complaint and that its methodology and legal analysis were flawed.
The CAT went further in Burgess (July, 2005), where it was asked to review an OFT decision rejecting an abuse of dominance complaint in relation to the use of a competitor's crematorium. Here,the CAT simply decided the matter itself concluding that there had in fact been an abuse of a dominant position and that Burgess was to have complete access to the crematorium in question. The CAT did not give the OFT the opportunity to reconsider the case. The CAT considered that it should take its own decision where, broadly, it has or can obtain all the necessary material; the requirements of procedural fairness are respected; and it is desirable to do so with regard to the "need for speed" and to save costs.
The CAT's approach has been confirmed by the Court of Appeal in Floe Telecom Limited (June, 2006) . Here, OFCOM rejected Floe Telecom's complaint that Vodafone was denying it access to certain telecommunications gateway services, while still supplying other providers, including those in the Vodafone group. The CAT found that OFCOM's decision to reject the complaint had not been fully reasoned, and the Court of Appeal recognised the CAT's right to decide for itself, without remission or reference back to the regulator in question, what the correct result of an investigation should have been if it feels able to do so. The CAT followed this approach in VIP Communications Limited (January 2007), involving similar facts to those in Floe Telecom. The CAT considered that while it should be mindful that it does not turn itself into the prime decision maker without good reason, it had acted as the decision-maker in a number of cases (often on the basis of new evidence not before the regulator) and reiterated the general principles outlined in Burgess.
OFWAT also faced the CAT's claws in Albion Water (October, 2006). Here, OFWAT rejected a complaint that the wholesale price of water charged to a new entrant by the dominant incumbent did not allow for a sufficient profit margin. The CAT fundamentally disagreed with OFWAT's analysis, though considered it appropriate for OFWAT to conduct further factual analysis before the CAT itself rules on whether there has been excessive pricing.
The CAT's now well established approach allows complainants a real opportunity to challenge a regulator's rejection of their complaint where it is felt that a thorough and rigorous analysis has not been carried out. At the same time it allows companies subject to a complaint the real opportunity to subject a regulator's conclusions against it to a rigorous and thorough analysis before the CAT.
There have been a growing number of cases where the CAT has stepped in and scrutinised regulatory decisions. In Claymore Dairies (September, 2005), the CAT required the OFT "tae think again" in rejecting a complaint by Express Dairies that Wiseman was acting anti-competitively in the Scottish milk market. The CAT felt that the OFT had failed to state adequate reasons for rejecting the complaint and that its methodology and legal analysis were flawed.
The CAT went further in Burgess (July, 2005), where it was asked to review an OFT decision rejecting an abuse of dominance complaint in relation to the use of a competitor's crematorium. Here,the CAT simply decided the matter itself concluding that there had in fact been an abuse of a dominant position and that Burgess was to have complete access to the crematorium in question. The CAT did not give the OFT the opportunity to reconsider the case. The CAT considered that it should take its own decision where, broadly, it has or can obtain all the necessary material; the requirements of procedural fairness are respected; and it is desirable to do so with regard to the "need for speed" and to save costs.
The CAT's approach has been confirmed by the Court of Appeal in Floe Telecom Limited (June, 2006) . Here, OFCOM rejected Floe Telecom's complaint that Vodafone was denying it access to certain telecommunications gateway services, while still supplying other providers, including those in the Vodafone group. The CAT found that OFCOM's decision to reject the complaint had not been fully reasoned, and the Court of Appeal recognised the CAT's right to decide for itself, without remission or reference back to the regulator in question, what the correct result of an investigation should have been if it feels able to do so. The CAT followed this approach in VIP Communications Limited (January 2007), involving similar facts to those in Floe Telecom. The CAT considered that while it should be mindful that it does not turn itself into the prime decision maker without good reason, it had acted as the decision-maker in a number of cases (often on the basis of new evidence not before the regulator) and reiterated the general principles outlined in Burgess.
OFWAT also faced the CAT's claws in Albion Water (October, 2006). Here, OFWAT rejected a complaint that the wholesale price of water charged to a new entrant by the dominant incumbent did not allow for a sufficient profit margin. The CAT fundamentally disagreed with OFWAT's analysis, though considered it appropriate for OFWAT to conduct further factual analysis before the CAT itself rules on whether there has been excessive pricing.
The CAT's now well established approach allows complainants a real opportunity to challenge a regulator's rejection of their complaint where it is felt that a thorough and rigorous analysis has not been carried out. At the same time it allows companies subject to a complaint the real opportunity to subject a regulator's conclusions against it to a rigorous and thorough analysis before the CAT.
