Antitrust Alert: UK’s Court of Appeal to Decide Competition Commission’s Powers in Telecoms Price Control Investigation

A recent appeal by the UK's mobile telephone operator, Everything Everywhere, to the UK's Court of Appeal may lead to a change to the Competition Commission's (CC) investigation powers in deciding telecoms price control matters in the future.

CC investigation powers in telecoms price control

On 6 June 2012, the Competition Appeal Tribunal (CAT) granted Everything Everywhere permission to appeal against an earlier CAT judgment on the following question:

Is the CC obliged, when determining telecoms price control matters referred to it by the CAT, to decide those matters in accordance with the evidence before it, without any additional investigation?

According to the CAT, the answer to this question ought to be "yes," because the CC would be acting as an administrative appeal body when deciding price control references, which it must decide on the basis of the evidence before it exclusively.

On 20 June, Everything Everywhere appealed the CAT judgment on this point to the Court of Appeal and contested that the CC ought to have obtained additional evidence to decide a price control reference made to it by the CAT, but failed to do so despite the fact that that evidence was obtainable.

Background

The UK's Communications Act (the Act) gives the UK's telecoms regulator, Ofcom, the power to impose various kinds of specific condition on communications providers, including conditions on operators that Ofcom has determined to have significant market power, so-called "SMP conditions," including price controls.

The Act provides that such price controls can be challenged on appeal to the CAT, but requires the CAT to refer any price control matter to the CC.  The CC must then determine the reference made by the CAT, using such procedures as the CC considers appropriate.  The CAT is bound to follow the CC's determination, unless the CC's decision would fall to be set aside on judicial review grounds that it is either irrational or disproportionate. 

So far, the CC has dealt with five telecoms price control appeals, including cases regarding price controls for leased lines (Cable & Wireless), wholesale line rentals (The Carphone Warehouse Group I), metallic path facilities (The Carphone Warehouse Group II), and two cases on mobile termination charges (Hutchison 3G UK Limited / British Telecommunications plc).  But the jurisdiction of the CC in deciding such matters has never been challenged before.

Conclusion

This appeal raises a point of general public importance on which there is no Court of Appeal authority and that is fundamental to the proper conduct by the CC of price control appeals.  We wait with interest to see if this leads to a narrowing or widening of the CC's powers in this respect.

This appeal will have an immediate effect on more than just Everything Everywhere.  There are three price control appeals currently pending before the CAT and more are likely to arise in the future pursuant to the recent entry into force of certain EU-driven legislative amendments to the UK Communications Act.

In addition, this appeal comes on the heels of sweeping changes to the CC's procedures for deciding price control matters which were announced earlier this year to cope with the foreseen increase in these price control appeals (see our Antitrust Alert, UK Competition Commission to Reform Telecoms Price Control Appeals).

Lawyer Contacts 

For more information, please contact your principal Jones Day representative or either of the lawyers listed below. 

Nicholas Cotter
London
+44.20.7039.5118
ncotter@jonesday.com

Francesco Liberatore
London
+44.20.7039.5221
fliberatore@jonesday.com 

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