Select Committee on Constitution Minutes of Evidence


Annex

OXERA/NORTON ROSE RECOMMENDATIONS

Royal Mail's support of the Recommendations

  The OXERA/Norton Rose report makes seven clear recommendations, each of which (with the exception of recommendation five which is related to the water sector) Royal Mail would support to improve the current regulatory situation.

1.   REGULATORY POLICY STATEMENT FOR PRICE REVIEWS

  Royal Mail believes that the production of a forward-looking Regulatory Policy Statement would improve the apparent ad-hoc approach to regulation. The statement would include clarification of the Regulator's proposed approach, prioritisation of objectives and duties and the key approach including building block methodologies for a price control review. Royal Mail was critical of the approach adopted by Postcomm at the recent price control when a timetable, structure and methodology was lacking.

2.   EARLY RESOLUTION PROCEDURES

  The introduction of resolution mechanisms at an early stage into the regulatory decision making process would be important to resolve disputes. The concept of a two stage process, initially internal to the regulator's office but with an escalation process to a hearing before a proposed new Regulatory Disputes Panel in the Competition Commission provides further transparency, Objectivity and predictability in the regulatory decision making process.

3.   PROVISION FOR THE COMPETITION COMMISSION TO SEEK A CONCORDAT BETWEEN THE REGULATOR, COMPANY AND OTHER STAKEHOLDERS, PRIOR TO COMMENCING A PRICE-CONTROL INQUIRY

  Although limited to a price control reference, this approach should speed the process by agreeing issues that would be excluded from a price control inquiry. Such an approach should be streamline the inquiry in terms of time taken and issues heard. The Concordat would prevent companies and regulatory from cherry-picking issues. The benefits would be a shorter period of uncertainty and should require less Director and Senior Management input into the process.

4.   SYMMETRY IN RIGHTS TO APPEAL DISPUTED LICENCE MODIFICATION

  Companies should be allowed to make proposals to the regulator, at their own initiative, for licence modifications, including for the removal of obsolete conditions. The regulator should be required to refer the proposals to the Competition Commission where it did not accept them. Proposals are limited to non-price determination related licence modifications but should include the removal of products and services where there is a de minimis level of revenue.

6.   A NEW RIGHT OF APPEAL AGAINST DECISIONS OTHER THAN PRICE DETERMINATIONS AND LICENCE MODIFICATIONS

  A new right of appeal for issues of concern to regulated companies, outside of a formal price control or a licence modification should be introduced. This is important as the regulatory regime currently provides the regulator with many opportunities, for example, through the use of determinations or directions to make significant changes and amendments to the regulatory contract without a course of appeal to the licensee. Royal Mail is currently faced with such an issue in relation to the Access determination. Postcomm is proposing a very low Access price which Royal Mail believes will undermine the universal service, but which, save an appeal to the Courts (on very limited and onerous grounds), is not challengeable.

7.   PRINCIPLES FOR ALLOCATING COSTS OF APPEALS

  Responsibility for deciding on cost allocation following appeals should be transferred from regulators to the body hearing the appeal, for example, the Competition Commission.

  Royal Mail believes that these recommendations will improve the regulatory system but will not overburden it by allowing every single issue to be appealed. In particular, recommendations 2, 4 and 6, above, are set to ensure that the benefit of additional scrutiny of regulators' decisions, widening the scope for appeals does not create a regulatory log-jam or lead to a de facto replacement of the regulator.


 
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