Select Committee on Constitution Minutes of Evidence

Supplementary Note: Judicial Review and Appeal to the Competition Commission

  1.  I am grateful to the Committee for the opportunity to clarify my evidence. There is no easily available source of statistical information relating to judicial review claims against regulators to the courts; the numbers so far have been quite small and examples will be given below. However, in my view there are good grounds to suspect that the number of claims, and use of appeal mechanisms, will increase and that it is desirable to anticipate this through the provision of more appropriate appeal arrangements.

  2.  When the utility regulators were established, there was little expectation that judicial review would become an important means of challenging their decisions; indeed, one of the objectives of the then Government was to avoid involvement of the courts so far as possible. In particular, the expectation was that competition would be relatively limited in the utility sectors and that each sector would be dominated by a single enterprise or a very small number of enterprises, for example in telecommunications the BT/Mercury duopoly. As a result disputes could be resolved by negotiation between regulator and enterprise. In fact, liberalisation has resulted in many more firms being subject to regulatory decisions, and this increases the likelihood of challenge by review or appeal. A number of quite important judicial review claims have in fact been brought against utility regulators.[19] Some have raised issues of general principle; others have rather been a means of resolving an individual dispute without such broader implications. Moreover, the threat of judicial review has become commonplace whenever an unfavourable regulatory decision is made; for example, over the last three months, there have been such threats in relation to decisions on mobile phone termination charges and airport charges. To a large degree such threats are for public consumption before the taking of legal advice; however they do reflect a growing realisation that legal remedies may be available.

  3.  Since the Competition Act 1998 came into effect in 2000, the role of formal legal rules and of legal challenge in competition law has increased enormously. Thus the former Monopolies and Mergers Commission, though occasionally subject to judicial review claims, had never lost one until the decision in the Interbrew case in 2001.[20] By contrast, the Competition Commission Appeal Tribunal set up under the 1998 Act has so far had a dozen cases registered since 2001 and will no doubt see more applications after the Enterprise Act has come into effect; in several cases decisions of the Director General of Fair Trading have been successfully challenged by this route.[21] This suggests that legal challenge will become more frequent and widespread for the utility regulators as well.

  4.  The Human Rights Act also creates a likelihood of further litigation. In particular the right to the peaceful enjoyment of possessions in the first protocol to the Convention may provide the basis for challenge of regulatory decisions which impose penalties or which affect the freedom to trade, for example through the withholding or conditional grant of a licence essential to an applicant's business.[22] Similarly, Article 6 of the Convention provides an opportunity to challenge regulatory decisions affecting civil rights and obligations (including the right to carry out a business) on procedural grounds. If experience in other contexts is any guide, the Convention may provide fertile grounds for legal argument against decisions such as the imposition of penalties or imposition of licence conditions by regulators; it certainly considerably extends the range of legal arguments available for challenge of the regulatory decisions.

  5.  My view is thus that an increase in legal challenges to regulatory decisions is inevitable. In my view, the current rag-bag of different procedures for challenge by appeal or review is not an appropriate means of providing such challenge. In particular, judicial review is more appropriately reserved for important decisions of principle, and whenever possible statutory rights of appeal should be provided instead for the resolution of legal disputes. The Competition Appeal Tribunal, which, under the Enterprise Act 2002 will take over the functions of the Competition Commission Appeal Tribunal, will be the most appropriate body to hear such appeals.

  I hope that this information is of help to the Committee.

Professor Tony Prosser, University of Bristol

19   See for example R v Director General of Gas Supply ex parte Smith, CRO/1398/88, QBD, 31 July 1989; R v Director General of Telecommunications ex parte British Telecommunications plc, CO/3596/96 (QBD), noted by C Scott at (1997) 8 Utilities Law Review 120; R v The Director General of Electricity Supply, ex parte Scottish Power, noted at (1997) 8 Utilities Law Review 126; R v Director General of Electricity supply ex parte Redrow Homes, The Times, 21 February 1995; Re Northern Ireland Electricity plc's Application for Judicial Review [1998] NI 300; R v Director of Water Services ex parte Lancashire County Council and Others, The Times 6 March 1998. Back

20   Interbrew SA v Competition Commission [2001] UKCLR 954 (QBD). Back

21   See eg Aberdeen Journals Ltd v Director General of Fair Trading, Competition Commission Appeal Tribunal, 19 March 2000; Bettercare Group Ltd v Director General of Fair Trading, Competition Appeal Tribunal, 1 August 2002, [2002] CAT 7. Back

22   See eg Tre Trakto­rer Aktiebolag v Sweden (1991) 13 EHRR 309. Back

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