Examination of Witness (Questions 133-139)|
WEDNESDAY 26 FEBRUARY 2003
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 companiesthe
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
(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
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
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
(Professor Prosser) Yes.
18 See the Supplementary Memorandum by the witness. Back