Select Committee on Constitution Minutes of Evidence


Examination of Witness (Questions 133-139)

WEDNESDAY 26 FEBRUARY 2003

PROFESSOR TONY PROSSER

Chairman

  133. Professor Prosser, thank you very much for being with us, and may I also thank you, as I did our previous witness, for the paper you have submitted. That is extremely interesting, not least because of its emphasis on some of the evidence we have received so far. We will be particularly keen to explore that with you. Before I put the first specific question, based on the very helpful paper you placed before us, are there any additional comments you would like to make to the Committee?

  (Professor Prosser) I think not. Everything is in my written memorandum.

  134. To pick up on what you wrote, as you are aware, one of the things we are looking at in the course of our work is accountability. One of the problems you raise, which has not really been raised by those we have had before us who are regulators, is the legal accountability, the process through the courts and the Competition Commission. You identify that as a problem. You have made the point in the paper. Would you care to expand on it for the benefit of the Committee: why is it perceived to be such a problem and what should one do about it?

   (Professor Prosser) I think the problem is due to the fact that we have seen a gradual incremental development of the law with the appointment of different types of regulators. When the original model was adopted with the Telecoms Act in 1984, it was thought that there would be very few challenges by judicial review, very few appeals, because the relationship was assumed to be between the regulator and perhaps a couple of dominant companies—the old BT/Mercury duopoly. It has not worked out like that, particularly in telecoms where we have a competitive market. I think that means that there are more actors, so to speak, in the marketplace. If they are disappointed they are more likely to seek judicial review or some form of appeal. Things have moved on in that sense. Things have also moved on, I think, in that we have a growing structure of European Community law, again especially in telecommunications, which might form the basis for future challenge. Finally, we have the Human Rights Act, Article 6 of the convention, and the First Protocol right, to peaceful enjoyment of possessions, which I think in many areas, not only in regulation, has already shown that it can provide the basis for a much wider range of challenges to the public decisions than actually was anticipated. The law has not yet caught up, except in some of the more recent examples of legislation, with that changing environment.

  135. Your point is that there is greater scope for review?

   (Professor Prosser) Yes.

  136. Is it the case that in fact there is more review? Are these instances of judicial review greater than would have been expected?

   (Professor Prosser) They were greater than originally anticipated. I think there have been several important cases. What we are seeing at the moment is a move towards the use of appeal, for example, the creation of the Competition Commission Appeal Tribunal. That has already heard a considerable number of cases in the general competition law area. At the moment, we have rather inconsistent arrangements for access to that tribunal. One can appeal a utility regulator's decision to it when concurrent powers under the Competition Act are being used, but not where a licence modification is in issue, when judicial review is the only remedy. I think the encouragement of challenge, which the creation of that tribunal has raised, is likely to lead to more challenges in the future[18]

  137. The point that Lord Jauncey raised with Mr Swift of course is the cost that is involved in that, both in terms of time as well as expense, so presumably the competence is going to be a significant problem. Is that the case and, if so, what is the solution?

   (Professor Prosser) I think we have to distinguish two things here. The model in the past for challenge of a licence modification decision by a utility regulator has been to refer the issue to the reporting arm of the Competition Commission, a lengthy, detailed examination. In many ways, this has been very useful because it has permitted the Competition Commission to lay down some general principles, for example on rate of return and the cost of capital. However, that is a cumbersome and expensive business. I think I would prefer to see a right of appeal to the Appeal Tribunal, which one hopes would be a more straightforward, shorter and cheaper means of challenge in regulatory decisions.

  138. Is that all that could be done in terms of the legal accountability? Is that sufficient?

   (Professor Prosser) Yes, I think that is right. In fact, it already is being done in the Communications Bill in relation to telecommunications. European law requires a right of appeal on the merits there, not simply on issues of legality, and that right of appeal, as the Bill currently stands at least, will be to the Competition Appeal Tribunal.

Lord Jauncey of Tullichettle

  139. You were explaining that for one of the utility regulators the appeal could only go to the full-blown Competition Commission when we are dealing with licensing modifications, whereas other appeals go to the Appeal Tribunal of the Competition Commission.

   (Professor Prosser) Yes.


18   See the Supplementary Memorandum by the witness. Back


 
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