Memorandum by the Competition Appeal Tribunal
THE ACCOUNTABILITY OF REGULATORS TO CITIZENS
Prior to the entry into force of the Enterprise
1. The origins of the CAT lie in the enactment
of the Competition Act 1998 ("CA98") which represented
the first major change to United Kingdom competition law for almost
a quarter of a century.
2. The CA98 replaced the Restrictive Trade
Practices Act 1976, the Resale Prices Act 1976 and the majority
of the Competition Act 1980. The old legislation was thought to
be unduly technical, and not to contain sufficient or effective
sanctions against genuinely harmful anti-competitive conduct.
The CA98 introduces two prohibitions based on Articles 81 and
82 of the EC Treaty: one of anti-competitive agreements ("the
Chapter I prohibition"); the other of anti-competitive conduct
by undertakings enjoying a dominant position ("the Chapter
3. The CA98 gives the competition authorities
(ie the Office of Fair Trading ("OFT") and the sectoral
regulators) wide powers to investigate undertakings believed to
be infringing either prohibition. These powers are similar (but
not identical) to those enjoyed by the European Commission in
enforcing Articles 81 and 82 of the EC Treaty. In addition, financial
penalties of up to a maximum of 10% of the turnover of the infringing
undertaking in the United Kingdom for up to three years may be
imposed for an infringement.
4. The OFT,
has principal responsibility for the day-to-day operation of the
regime under the CA98. This includes conducting investigations
deciding whether the prohibitions have been infringed and taking
enforcement measures including the imposition of fines. Where
agreements or conduct being considered under the CA98 concern
the regulated utilities, the OFT shares jurisdiction concurrently
with the relevant sectoral utilities regulators in telecoms, gas,
electricity, water, and railways.
5. In light of the fact that considerable
power has been conferred on the OFT and the sectoral regulators
to impose penalties on undertakings, Parliament thought it necessary
by means of sections 45 to 49 of the CA98 to establish a mechanism
for appealing from decisions of the OFT and the sectoral regulators.
Parliament did not consider that the previous judicial review
process constituted an adequate remedy and therefore made it possible
for undertakings to appeal against the substance and not just
the legality or reasonableness of a United Kingdom competition
6. Any party to an agreement and any person
in respect of whose conduct the OFT or regulator has made a decision
within the meaning of section 46(3) of CA98, may appeal against
that decision. In addition, a person who is not the subject of
a decision but who demonstrates that they have "sufficient
interest" in the decision, may also appeal against that decision.
7. In order to give effect to these rights
of appeal the CA98 created a new specialist appeals body which
for various, mainly pragmatic reasons such as access to support
services, was originally located within the structure of the Competition
Commission. The new appeals body was therefore known as the Competition
Commission Appeal Tribunals ("CCAT").
8. It will be remembered that the Competition
Commission although a new institution, established in April 1999
pursuant to section 45(1) of the CA98, was also the successor
body to the Monopolies and Mergers Commission ("MMC"),
which carried out inquiries and reported to the Secretary of State
on merger and monopoly situations referred to it under the Fair
Trading Act 1973 as well as carrying out various regulatory inquiries.
9. Until April of this year (when the latest
wave of institutional change, leading directly to the creation
of the CAT, took place under the Enterprise Act 2002), the Competition
Commission was therefore an institution with two "sides"
to its work: a "reporting side" (the former MMC) and
an "appeals side"(the CCAT). The reporting side was
headed by the Chairman of the Competition Commission and the appeals
side was headed by the President of the CCAT.
10. Despite the fact that during the period
April 1999 to March 2003 the reporting and appeals sides were
part of the same overall organization, the work of each side was
carried out completely independently and separately from the other
side. For all purposes the President of the CCAT had no involvement
in or responsibility for the work of the reporting side and the
Chairman of the Competition Commission as the head of the reporting
side was in a similar position with regard to the work of the
Institutional changes to the Competition Commission
made by the Enterprise Act 2002
11. On 1 April 2003 a number of provisions
of the Enterprise Act 2002 were brought into force which changed
the institutional structure outlined above. 
12. For present purposes, the principal
effect of these provisions was to transform the CCAT into a new
Tribunal called the Competition Appeal Tribunal ("the CAT")
which, as the change of name indicates, is no longer part of the
Competition Commission but an entirely separate and independent
13. The Competition Commission now solely
consists of the former reporting side (or former MMC) dealing
Merger and market investigations
according to terms of reference set by the OFT and/or Secretary
In relation to the privatized utilities,
licence modification investigations upon terms of reference set
by the sectoral regulators. 
14. As from 20 June 2003, the Competition
Commission will no longer report to the Secretary of State in
merger and market investigations but will determine the matter
itself, subject to a review by the CAT: see further below.
15. Cases are heard before tribunals consisting
of three members (either the President or a legally qualified
Chairman and two other members) appointed by the President.
16. The office of President is a full time
appointment, equivalent to that of a High Court judge. The present
holder of the office is Sir Christopher Bellamy. He was appointed
Queens Counsel in 1986. From 1992 to 1999 he was a judge of the
Court of First Instance of the European Communities. He also sits
as a Deputy High Court judge in the Administrative Court, as a
judge of the Employment Appeal Tribunal, and as a Recorder of
the Crown Court. He has published numerous articles and a textbook
on European competition law now in its fifth edition. Sir Christopher
Bellamy is currently President of the European Association of
Competition Law Judges.
17. The other members of the CAT serve on
a part-time basis. There are currently twenty Appeal Tribunal
members with backgrounds in legal, economic, accounting, business
and other relevant disciplines. Whilst their biographical details
are set out in Annex I [not printed] to this letter, the Committee
may be interested to observe that four of the members are distinguished
professors of economics. Eight members are lawyers of whom several
sit on various other tribunals. Two are former members of the
Restrictive Practices Court. One member is an accountant. In addition,
one is a member of the Radio Authority.
18. The CAT's staff is headed by the Registrar
and consists of three lawyers (who have previously worked in major
City law firms and at the Bar) who assist the President and the
Tribunal members in analysing case documentation and legal issues
and producing judgments together with a further five clerical
and secretarial staff.
19. Since the creation of the Tribunal the
President has had a statutory obligation to arrange such training
for Appeal Tribunal members as he considers appropriate. The President
has therefore organised an ongoing detailed programme of training
seminars for Appeal Tribunal members covering every aspect of
UK and EC competition law, relevant economic concepts and procedural
matters. The training programme also includes the use of case
studies (where members are required to analyse particular legal
and economic situations), as well as lectures on the structure
of each of the regulated industries from which CA98 appeals may
be made (water, gas, electricity, telecommunications and railways),
with presentations conducted with the assistance of representatives
of each of the regulatory offices.
20. In relation to its role under the CA98
the CAT is required to address matters of substance as well as
the legality or fairness of the particular decision. In other
words the CAT must determine a CA98 appeal on the merits. The
CAT may therefore reconsider the detailed economic as well as
legal analysis applied by the OFT or sectoral regulator and take
any decision that the OFT or sectoral regulator could have taken.
Where further investigation is required, the case may be remitted
in whole or part back to the OFT or sectoral regulator.
21. The procedure governing appeals to the
Appeal Tribunals is currently set out in the Competition Appeal
Tribunal Rules 2003, SI 2003 No 1372.
22. Those procedures are explained in general
terms in the Guide to Appeals under the Competition Act 1998,
produced by the CCAT in June 2000 ("the Guide"). A copy
is enclosed at Annex II. [not
23. The central feature of the Appeal Tribunal's
method of operation is a tightly controlled procedural regime
in which cases are actively managed in order to minimise the traditional
difficulties presented by competition casesthose of byzantine
complexity of issues, hypertrophic growth of documentation and
evidence and inordinate duration of proceedings.
24. The principles underpinning the CAT's
management of cases are: (i) full and early disclosure in writing
of the appellants' arguments, with all relevant documents and
witness statements; (ii) early and regular case management conferences,
in order to determine the main issues in the case, set a timetable,
and deal with interlocutory issues; (iii) short and structured
oral hearings concentrating on the main points; (iv) effective
fact finding procedures; and (v) a target period (normally six
months in a straightforward case) in which the proceedings are
to be completed. The CAT's practice is to hold the first case
management conference as soon as possible after an appeal has
been received, even before the service of a defence, and then
to hold subsequent case management conferences as required.
25. As a court the CAT has considerable
power to control the proceedings before it including the power
Summon witnesses and require the
production of documents.
Debar parties from taking any further
part in proceedings.
Receive payments in to settle proceedings.
Order security for costs.
Order the payment of costs and interest.
Order interim relief to prevent irreparable
damage and to protect the public interest.
26. In addition the CAT has power to make
reference to the European Court of Justice on a question of Community
law under Article 234 of the EC Treaty.
27. The CAT's jurisdiction extends to the
whole of the UK, allowing for a consistent approach to the development
of competition law across the whole country. As a result of this,
further appeal on a ruling of the CAT may be made to the appropriate
court, with permission, on a point of law arising from a decision
of a tribunal, or from any decision of a tribunal as to the amount
of a penalty. In relation to proceedings in England and Wales,
the appropriate court is the Court of Appeal; in relation to Scotland,
it is the Court of Session; and, in relation to Northern Ireland,
it is the Court of Appeal in Northern Ireland.
28. Another noteworthy point is that under
its rules of procedure, the Appeal Tribunal can appoint experts
to advise it on any matter on which the Tribunal does not possess
its own expertise.
29. The CAT (in its former incarnation as
the CCAT) heard the first appeals under the CA98 in the year April
2001 to March 2002. Five appeals and two applications for interim
relief were received during the year, giving rise to 12 judgments.
A number of judgments dealt with interlocutory or procedural issues,
but four judgments dealt with substantive issues involving novel
and complex points of law and the interpretation or application
of complex economic and commercial facts. One case (General
Insurance Standards Council or "GISC") involved
points of central importance to the whole of the UK insurance
industry and concerned the relationship between regulatory rules
and competition law. Another case (Napp Pharmaceuticals)
was a very important decision in both UK and European terms concerning
predatory and excessive pricing. The third case (Aberdeen Journals)
was also an important case in emphasising the need for proper
market analysis in the application of the CA98 and the fourth
case (Bettercare) concerned the type of matter that can
be appealed under, and the types of activities covered by, the
30. The Appeal Tribunal's rules of procedure
and case management powers have proved effective. An interlocutory
judgment in Napp on 10 July 2001 underlined the Tribunal's
reluctance to grant extensions of time once a timetable has been
agreed. As a result of the emphasis on written procedure, the
oral hearing stage before the Tribunal has been relatively short,
with complex issues being argued in hearings taking 1Ö days
(GISC), four days (Napp), one day (Aberdeen Journals)
and one day (Bettercare). The appeal in GISC was
decided in three months from start to finish. The appeal in Napp,
a novel and complex case, was decided in 7Ö months (following
a 20 month inquiry by the OFT). In Aberdeen Journals and
Bettercare, the interim judgments were delivered six months
and four months respectively after the lodging of the appeals.
The President's interim measures judgment in Napp was given
11 days after the request for interim measures was made, but could
have been given much sooner had the particular circumstances been
31. In the year April 2002 to March 2003,
the CAT has been called upon to examine questions relating to
decisions taken not only by the OFT but also by several of the
sectoral regulators. The case of Freeserve.com plc v Director
General of Telecommuncations involved an examination of the
interface between the Telecommunications Act 1984 and the CA98
and the scrutiny of the Director's decisions with regard to the
broadband internet services sector. Currently before the Tribunal
is the case of Aquavitae (UK) Limited v Director General
of Water Services where the issue is whether, on the particular
facts, a course of action taken by the Director constitutes a
decision made under the CA98.
32. Finally it is worth noting that the
CAT has now heard cases in Scotland and Northern Ireland as well
as England and Wales.
33. For background information, a number
of tables relating to the CAT's caseload are set out at Annex
III [not printed].
The Enterprise Act 2002
34. The Enterprise Act has extended the
CAT's jurisdiction in a number of respects which build upon the
CAT's capacity to handle large and complex economics related issues
in fast timescales. Briefly the proposed changes (to come into
force on 20 June 2003) are:
That any person aggrieved by a decision
of the OFT, the Competition Commission or the Secretary of State
in relation to a merger investigation may apply to the CAT for
a review of that decision.
There will be a similar statutory
right to apply to the CAT for a review of decisions made by the
OFT, sectoral regulator, the Competition Commission and the Secretary
of State in respect of market investigations A review by the CAT
in relation to merger and market investigations will be a judicial
review of the administrative body's decision, on the basis of
the principles of administrative law applied in the High Court.
The thinking behind this is that the CAT will already be up to
speed with the economic and regulatory background and will be
able to understand the specialized subject matter with less need
for lengthy oral explanation by lawyers. The CAT membership is
likely to be expanded to allow for a greater degree of participation
by members of the judiciary in chairing particular cases, so the
legal expertise of the CAT in applying judicial review principles
should in practice match that of the High Court. Overall, the
CAT should be able to use its case management powers to ensure
that cases are dealt with authoritatively within appropriate timescales.
The CAT will be able to hear claims
for damages caused as a result of anti-competitive practices.
This will cover not only claims from individuals, but also claims
made by representative bodies on behalf of groups of named and
identified consumers. Such claims may only be made to the CAT
where the OFT (or a sectoral regulator) or the European Commission
has made a decision that there exists an infringement of competition
law, and the appeals process has been exhausted.
The Communications Bill
35. The Communications Bill currently before
Parliament provides for a right of appeal to the CAT in respect
of decisions made by OFCOM under Part 2 of the Bill (Networks,
Services and the Radio Spectrum).
This has been thought appropriate given that:
The CAT is already the appeal body
for the sector under the CA98. Involving the CAT now as the appeal
body under the Communications Bill will enable a consistent approach
to be taken to regulatory and competition matters in the sector.
Under the CA98 the CAT already decides
on the application of a dominance based competition test and the
concept of "significant market power" contained in the
Bill is closely related to dominance in UK and European competition
Members of the CAT (and especially
the President) have long experience in working with European case
law and legislation upon which many of the concepts of the Communications
Bill are based.
The CAT is therefore well placed
to interpret the issues in a particular case against the wider
European telecoms regulation and competition law background which
will aid the development of a consistent approach in European
The relevant EC Directives (bringing
into force a new European-wide system of regulation of the communications
sector) provide for a right of appeal to a body that is independent
of the parties involved. The CAT's procedure ensures impartial,
and transparent consideration of cases and culminates in a hearing
at which all parties are able to argue their case before the Tribunal
and in the presence of each other.
The CAT is a body which has, in the
terms of the relevant EC Directive,
"appropriate expertise available to it"in the
form of the expertise of its membership and its ability to appoint
experts to advise it on particular issues. Such issues could include
likely developments in a particular market or whether a particular
course of action is consistent with accepted practice in the regulation
In its performance to date under
the CA98 the CAT has demonstrated its ability to deal with large
cases raising complex and novel issues quickly and robustly.
26 June 2003
1 Prior to the entry into force of section 2(2) of
the Enterprise Act 2002 on 1 April of this year, the significant
regulatory powers under the CA98 were vested in an individual,
the Director General of Fair Trading. That office was abolished
on 1 April 2003, and the CA98 powers are now vested in the Board
of the OFT. Back
Section 12 and Schedule 2 Enterprise Act 2002. Back
This type of inquiry is often termed "an appeal" but
it is not an appeal in the classic sense being rather an inquiry
prompted by the regulator in response to a refusal by the regulated
undertaking to accept the regulator's proposed modifications to
the relevant licence. The role of the Competition Commission is
to investigate whether the state of affairs, in the absence of
a licence modification, may be expected to operate against the
public interest and if it does to formulate appropriate modifications
to the licence. As a form of challenge to regulatory action on
the part of regulated undertakings and/or other affected bodies
or citizens, this type of inquiry represents at best an oblique
form of "appeal" the only other means of challenging
regulators decisions being an application for judicial review
in the courts. Back
Schedule 8, paragraph 3(2)(a) CA98. Back
A new edition is currently being prepared to take account of
the CAT's new functions under the Enterprise Act 2002. Back
Some pricing issues are to be referred by the CAT to the Competition
Commission, whose decision is reviewable by the CAT. Back
EC Framework Directive 2002/21. Back