Concurrency
Summary and Background
367.The OFT has the economy wide function of enforcing anti-trust provisions (Part 1 of the CA 1998) and has market investigation reference powers (Part 4 of the EA 2002).
368.Alongside the OFT are the sector regulators whose functions include promotion of competition or dealing with anti-competitive practices. The regulators also have competition powers concurrently with the OFT. The sector regulators with concurrent powers, and the areas in relation to which they have those powers, are:
the Civil Aviation Authority (“CAA”): air traffic services and airport operation services, both in the United Kingdom;
Monitor: healthcare services in England (and there is a power for the Secretary of State to extend these powers to the area of social care in England);
the Northern Ireland Authority for Utility Regulation (“NIAUR”): gas, electricity, water and sewerage services in Northern Ireland;
the Office of Rail Regulation (“ORR”): railway services in Great Britain;
the Office of Communications (“Ofcom”): electronic communications, broadcasting and postal services in the United Kingdom;
the Office of Gas and Electricity Markets (“Ofgem”): gas and electricity in Great Britain; and
the Water Services Regulation Authority (“Ofwat”): water and sewerage England and Wales.
369.The sector regulators can take a range of approaches to promote competition, including imposing and enforcing licence conditions using powers under their own sectoral legislation. In addition, the regulators share the OFT’s powers to enforce Part 1 of the CA 1998 and make market investigation references to the CC under Part 4 of the EA 2002.
370.The Act largely retains the existing concurrency provisions, but strengthens the role of the CMA and enhances the emphasis on early and proper consideration of the use of anti-trust powers (under Part 1 of the CA 1998) by the sector regulators.
371.The Act amends the concurrency arrangements in five respects:
sector regulators will have an explicit requirement to consider the anti-trust powers under CA 1998 before using their own sector powers;
the Secretary of State can currently make regulations about the procedures for the competition authorities to decide which body will lead on a CA 1998 case where concurrent powers apply. As a result of the amendments, the Secretary of State will be able to make regulations which provide that the CMA may in particular decide, in certain circumstances, that it (rather than a sector regulator) will exercise the concurrent functions in a CA 1998 case;
the Secretary of State will have the power to make regulations requiring arrangements to be made for the sharing of information between the CMA and the sector regulators in connection with cases in respect of which concurrent powers arise;
there will be a new requirement that the CMA will publish an annual report covering the use of competition powers by it and the sector regulators; and
the Secretary of State will have the power to remove concurrent competition functions of certain sector regulators.
372.These changes are intended to give the CMA a leadership role in the concurrency arrangements and it will be expected to work closely with the sector regulators.
Section 51: Powers of sectoral regulators and Schedule 14: Regulators: use of powers under 1998 Act
373.Section 51 amends the powers of the Secretary of State under section 54 of the CA 1998 to make regulations governing the operation of concurrency.
374.Subsection (2)(a) amends section 54(6) to allow regulations made by the Secretary of State to set out the circumstances in which the CMA may decide that it will undertake a case under the CA 1998 rather than the regulator with concurrent functions. Subsection (3) inserts a subsection (6A) clarifying that such regulations must require the CMA to consult the regulator before taking over a case and to have the consent of the regulator if it wants to take over a case after the regulator has issued a notice stating that it proposes to make a decision as to whether there has been a relevant infringement (in other words, after a draft decision has been issued).
375.Subsection (2)(b) allows regulations made by the Secretary of State to provide for the CMA as well as the Secretary of State to decide questions about which of the competition authorities should undertake a CA 1998 case.
376.Subsection (4) inserts new subsections (6B) and (6C) into section 54. These provide for regulations made by the Secretary of State to include requirements for information sharing arrangements to be put in place between “competent persons”, i.e. the regulators with concurrent CA 1998 powers and the CMA (“competent person” is defined in section 54(7)). The information that may be covered by these arrangements includes information in connection with cases being conducted by them under the CA 1998 and cases which a regulator decides to undertake using powers under the sector-specific legislation, even though it considers that it would also have been open to it to proceed with the case under the CA 1998.
377.Subsection (5) introduces Schedule 14 which amends the sector-specific legislation to clarify the relationship between the powers of the regulators under that legislation and their powers under the CA 1998. Schedule 14 therefore amends the following legislation:
| CAA | Transport Act 2000 |
| Monitor | Health and Social Care Act 2012 |
| NIAUR | The Energy (Northern Ireland) Order 2003 |
| The Water and Sewerage Services (Northern Ireland) Order 2006 | |
| Ofcom | Communications Act 2003 |
| Postal Services Act 2011 | |
| Ofgem | Gas Act 1986 |
| Electricity Act 1989 | |
| Ofwat | Water Industry Act 1991 |
| ORR | Railways Act 1993 |
378.The amendments made by Schedule 14 re-frame the existing duties on the sector regulators to consider using their powers under the CA 1998 to deal with anti-competitive practices. Currently, these duties generally require that a regulator may not take the relevant kind of enforcement action in a case in which it decides that a more appropriate way of proceeding would be under its CA 1998 powers. This means there is at present an implicit requirement for sector regulators to consider the CA 1998 before using their sector powers. Under the amendments made by Schedule 14 there will be an explicit duty on each regulator to consider whether a more appropriate way of proceeding would be under the CA 1998 before using its sector-specific powers. The intention behind this change in emphasis is to encourage regulators to turn their minds to the question of whether the CA 1998 route is more appropriate at an earlier stage.
379.Ofcom’s current duty in broadcasting (as opposed to electronic communications and postal services) and the CAA’s duties under the Civil Aviation Act 2012 to consider relying on the CA 1998 are not amended by Schedule 14 as these already are framed in terms of the regulator having first to consider the CA 1998.
380.In addition, Schedule 14 amends certain provisions of the Electricity Act 1989 and the Electricity (Northern Ireland) Order 1992 relating to the determination of questions arising as to whether the powers under the CA 1998 are exercisable by a regulator in a particular case. In order to create greater consistency, the amendments align the wording of some of these provisions with the general approach in the equivalent provision in the other sectoral legislation listed above.
381.Paragraph 16 of Schedule 4 is also relevant to the provisions made by section 51 and Schedule 14 in that it requires the CMA to publish an annual report outlining co-operation between the CMA and the sector regulators and the use of competition powers by it and regulators in the sectors where concurrent powers apply.
Section 52: Power to remove concurrent competition functions of sectoral regulators
382.Section 52 introduces a reserve power for the Secretary of State to remove concurrent powers from sector regulators in future.
383.Subsection (1) provides that the Secretary of State may by order made by statutory instrument amend any enactment to remove from a sectoral regulator either its functions under Part 1 of the CA 1998 Act or its functions under Part 4 of the EA 2002, or both (a “sectoral regulator order”). The Secretary of State has the power to make a sectoral regulator order where he considers that it is appropriate to do so for the purpose of promoting competition, within any market or markets in the United Kingdom, for the benefit of consumers. Subsection (3) provides that a sectoral regulator order may also amend any enactment the Secretary of State considers appropriate as a consequence of the removal of the specified functions (for example, removing a regulator’s duty to consider Competition Act enforcement.) Subsection (6) provides that the statutory instrument containing a sectoral regulator order is subject to the affirmative resolution procedure in Parliament.
Section 53: Orders under section 52: procedural requirements
384.Section 53 sets out the procedural requirements in relation to a sectoral regulator order. Where the Secretary of State proposes to make a sectoral regulator order, he is required under subsection (1) to consult the regulator whose functions would be removed by the order, the CMA (or the OFT, before the CMA’s duty and powers are commenced), and devolved administrations where they have a role in relation to an affected regulator. Where, following this first stage consultation, the Secretary of State still proposes to make a sectoral regulator order, the Secretary of State is required under subsection (3) to consult: the bodies consulted in the first stage consultation; consumer and business groups who represent those whose interests are affected; and such other persons he considers appropriate. The Secretary of State is required to explain to the persons consulted which powers of the regulator are subject to the proposed order and the reasons for removing them.
385.The following are the sector regulators with concurrent competition powers under Part 1 of the CA 1998 and Part 4 of the EA 2002 that may be affected by a sectoral regulator order:
Ofcom;
Ofgem;
Ofwat;
ORR
NIAUR
CAA
