Regulatory Appeals

This note examines the background to a 2013 government review of appeals against regulators' decisions.

The review was triggered by criticism, especially from Ofcom, that companies had become adept at using appeals to the Competition Appeal Tribunal (the CAT) to postpone much needed regulatory decisions (e.g. those aimed at promoting the roll-out of 4G mobile telecoms technology) with consequential damage to the UK economy. However, with one exception, there was no further word from the government following publication of the consultation document. The exception is that the 2016 Digital Economy Act provides that future appeals against Ofcom's decisions will be determined 'by applying the same principles as would be applied by a court on an application for judicial review' - in other words there will no longer be a rehearing of the merits of the decision.

There were however further anti-appeal rumblings in 2019 to which Peter Freeman responded, including - from para 12 - a superb summary of the original reasons - still valid today - for the creation of the modern enforcement system. 

The Case for and against Reform

The following notes summarise the case for and against change as made in 2013.. The consultation document is summarised here.

Ofcom was not the only body to have expressed concern or exasperation with the CAT. Critics focused on three main areas:

Delay

The first and main concern was that appeals process simply took far too long, and so encouraged appeals mainly aimed at delaying the implementation of unwelcome regulatory decisions. The 10 year Pay TV saga was a nice example - see this detailed note. Critics argued, back in 2012, that the Tribunal sometimes appeared to see itself more as an alternative competition authority/regulator than as a court. It is too ready to see, with the benefit of hindsight, how regulators could have done a better job. There was none of the crisp cut to the chase approach seen in some courts, and especially in the CMA's Code Modification Appeal hearings. The Tribunal, it is said, allows long and detailed arguments, delves into great detail, and produces enormously lengthy judgments, unintelligible to anyone other than real experts.

This was not a new problem. Back in 2008, after the first Albion Water appeal went on to the Court of Appeal, that Court said:

We conclude with a few more general observations on the proceedings before the Tribunal in this case. We recognise that the subject-matter is highly complex and that the merits jurisdiction of the Tribunal may call for extensive factual investigation in the course of appeals before it, all of which may contribute to the length of its proceedings and of its judgments . We are, however, concerned at the number of separate judgments in the case, the length of those judgments, the extent to which the sequential approach gave rise to duplication (which has made it more difficult for us to digest and analyse the Tribunal's reasoning for the purposes of this appeal), and the protracted nature of the proceedings overall. The interim judgment in December 2005 was 428 paragraphs long and, with headnote, takes up 90 pages of the printed law report. The main judgment in October 2006 was 985 paragraphs long and, with headnote and an annex, extends to 241 pages of the printed law report. The further judgment in December 2006 was 360 paragraphs long and, with headnote, takes up 91 pages of the printed report. Astonishingly, the judgment refusing permission to appeal in February 2007 was itself 133 paragraphs long. A yet further judgment on the issue of excessive pricing is still awaited.

We are sure that there must be a more efficient and speedier way of dealing even with complex cases of this kind. In particular, we urge the Tribunal to do its utmost to produce, if at all possible, shorter judgments for the benefit of everyone in the future. We recognise both that this court often produces judgments which are too long and that parties are inclined to take many points in cases of factual and legal complexity, but we cannot believe that it would not be possible to resolve the issues more concisely. We will try to do so ourselves and we urge others to do the same.

The CAT of course believed that this criticism was unfair. It is certainly true that the Tribunal moved a lot faster than the water regulator. The original complaint was made in March 2001 - 10 years before the above-mentioned claim for damages reached the CAT. (The follow-on Albion Water claim for damages was filed in June 2010 but did not receive its (12 day!) hearing until October 2012, and judgment was not handed down until March 2013.) Ofwat had previously carried out a three year investigation but found no infringement. Subsequent appeals were fought by Dwr Cymru and United Utilities all the way through to the Court of Appeal. Huge costs were incurred and the CAT showed itself much more sympathetic than Ofwat to the arguments of tiny Albion Water. Follow this link for the full tortured history of this litigation.

Other Criticisms

Second - this was to some extent losers' sour grapes but - some critics argue that some CAT decisions appear a little odd, betraying a rather less than ideal grasp of competition principles and practice. The initial Sky Pay TV decision may be in this category.

Another slightly strange decision may have been the finding of apparent bias in CC's Stansted Airport decision, but this was fairly quickly overturned in the Court of Appeal - but only after the CAT had refused permission to appeal - in itself a somewhat strange decision, which also had to be overturned by the Court of Appeal. The Stansted appeal process, from the first appeal against a March 2009 CC decision, was nevertheless not finally concluded until February 2013 - almost four years later, only seven months of which had been spent in the Court of Appeal. BAA, the appellant, was no doubt delighted at this delay, even though they finally lost.

Third, it is also alleged, by some, that the CAT has got into the habit of making very broad findings of fact. A higher court then takes these facts as uncontestable so the losing party cannot appeal using them. As a result, it is hard to appeal those decisions, which makes the court look rather good (as the Appeal or Supreme Courts seldom weighs in) but isn't necessarily in the interests of justice. Again, the Sky Pay TV case may be an example of this problem.

The Case for the Defence

The CAT had some decent explanations and points to make in answering the above criticisms. Its detailed response to the consultation was pretty hard hitting, including the comment that 'No case at all is made out in the Consultation for altering or reformulating the standard of review in competition appeals under the Competition Act 1998, whether from decisions of the Office of Fair Trading (“OFT”) / CMA or from regulators with concurrent powers. The Consultation contains little, if any, analysis of the competition system; it appears not to appreciate the significance of current expectations and developments at European level in relation to appeals in competition cases; and it threatens to undermine a key element of the Government‟s current reform of the competition system.' And the CAT was supported by all other respondents except Ofcom and some new entrant telecoms companies.

In particular:-

  • The CAT is not the only culprit. Many mainstream court decisions can be (and are!) criticised for being too long and too late.
  • And UK regulators are far from alone in expressing concern about the impact of delays in competition cases. Indeed in a National Commission report to the President of the United States in 1979 it was noted that: 'Not all antitrust cases are complex or protracted. Nor are all complex cases antitrust cases. Evidence .. however indicates that, on average, anti-trust cases take longer to litigate than other civil litigation; that some antitrust cases absorb enormous resources and time; and that undue delay is a serious problem in a significant number of complex antitrust cases. The resulting burdens on litigants and the courts are great. Excessive public and private resources are needlessly expended; confidence in antitrust enforcement and the judicial process is weakened; and effective enforcement is impeded. Difficult remedial problems are compounded because the market reflected in the record may have changed substantially by the time the remedial stage is reached. In short the overall effectiveness of the antitrust laws in promoting a competitive economy is impaired.'
  • Lengthy regulatory appeals may be exceptional. Indeed, the average time from registration to the final judgment on the substance of the case was 8.7 months. In particular merger cases are dealt with very speedily. For example: the contested merger of HBOS and Lloyds Bank - at the time a matter of major strategic importance for the UK economy - took 10 days from receipt of the appeal in the CAT's Registry to a final thirty-nine page closely-reasoned judgment setting out clear conclusions from the considerable amount of detailed evidence submitted to the Tribunal. In the course of that 10 days the CAT held two hearings, each attended by over 100 people.
  • In the Pay TV case (see above) the CAT had to deal with six separate appeals by BSkyB, the Football Premier League, BT, Virgin and others in a multi-partite process involving over 35,000 pages of submissions and evidence, flowing from a highly detailed and lengthy Ofcom decision.
  • The responsible pro-business government department, BIS, in its Jan 2013 Private Actions White Paper, said that "[the CAT offers] efficient management and flexible procedures".
  • Two members of every three person Tribunal panel are usually lay members with relatively little judicial experience, and paid a relative pittance (£350 a day) - at least compared with the £1million+ a year lawyers who act for the private sector appellants. It is therefore perhaps not surprising that the Tribunal is reluctant to force the pace against litigants with such deep pockets.
  • Like any court, the Tribunal can find it difficult to discuss its practices and decisions with those who appear frequently before it - i.e. the main UK competition authorities and regulators. It would be quite wrong for the CAT to have conversations with only one type of litigant, and regulators etc. simply have learn the necessary from close examination of the Tribunal's judgments. This is a fair point, but the learning process is inevitably very slow given the glacial pace at which the CAT itself works.


Martin Stanley

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