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Cite as: [2007] CAT 6

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Neutral citation [2007] CAT 6
IN THE COMPETITION                                                      Case No: 1058/2/4/06
APPEAL TRIBUNAL
Victoria House
Bloomsbury Place                                                                          26 January 2007
London WC1A 2EB
Before:
Marion Simmons QC (Chairman)
Ann Kelly
Michael Blair QC
Sitting as a Tribunal in England and Wales
BETWEEN:
INDEPENDENT WATER COMPANY LIMITED
Appellant supported by
ALBION WATER LIMITED
Intervener
-v-
WATER SERVICES REGULATION AUTHORITY
Respondent supported by
BRISTOL WATER Pic
Intervener
Heard at Victoria House on 9 June 2006
JUDGMENT
APPEARANCES
Mr Edward Mercer (of Messrs Taylor Wessing) appeared on behalf of the appellant.
Dr Jeremy Bryan, Managing Director of Albion Water Limited, appeared on behalf of Albion Water Limited.
Mr George Peretz and Miss Valentina Sloane (instructed by Head of Legal Services, Ofwat) appeared on behalf of the respondent.
Mr Stephen Tupper (of Watson, Farley & Williams LLP) appeared on behalf of Bristol Water Plc.
I         SUMMARY
Summary of conclusions
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measures was not contained in the notice of appeal; and (iii) that there are no exceptional circumstances such as to justify giving permission to amend the notice of appeal under Rule 11 of the Competition Appeal Tribunal Rules 2003, SI 2003/1372 (“the Tribunal’s Rules”).
II INTRODUCTION
The main participants
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The Tribunal understands that a number of houses have been built and are currently in occupation but that more building is also planned.
IWC’s intended arrangements for the Weston Road site
III THE STATUTORY FRAMEWORK
The 1998 Act
“46 Appealable decisions
(1)    Any party to an agreement in respect of which the OFT has made a decision may appeal to the Tribunal against, or with respect to, the decision.
(2)    Any person in respect of whose conduct the OFT has made a decision may appeal to the Tribunal against, or with respect to, the decision.
(3)    In this section “decision” means a decision of the OFT—
(a)     as to whether the Chapter I prohibition has been infringed,
(b)    as to whether the prohibition in Article 81(1) has been infringed,
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(c)     as to whether the Chapter II prohibition has been infringed,
(d)    as to whether the prohibition in Article 82 has been infringed,
(e)     cancelling a block or parallel exemption,
(f)     withdrawing the benefit of a regulation of the Commission pursuant to Article 29(2) of the EC Competition Regulation,
(g)    not releasing commitments pursuant to a request made under section 31A(4)(b)(i),
(h) releasing commitments under section 31A(4)(b)(ii),
(i) as to the imposition of any penalty under section 36 or as to the amount of any such penalty,
and includes a direction under section 32, 33 or 35 and such other decisions under this Part as may be prescribed.
(4)    Except in the case of an appeal against the imposition, or the amount, of a penalty, the making of an appeal under this section does not suspend the effect of the decision to which the appeal relates.
(5)    Part I of Schedule 8 makes further provision about appeals.
47 Third party appeals
(1)    A person who does not fall within section 46 (1) or (2) may appeal to the Tribunal with respect to—
(a)     a decision falling within paragraphs (a) to (f) of section 46(3);
(b)    a decision falling within paragraph (g) of section 46(3);
(c)     a decision of the OFT to accept or release commitments under section 31A, or to accept a variation of such commitments other than a variation which is not material in any respect;
(d)    a decision of the OFT to make directions under section 35;
(e)     a decision of the OFT not to make directions under section 35; or
(f)     such other decision of the OFT under this Part as may be prescribed.
(2)    A person may make an appeal under subsection (1) only if the Tribunal considers that he has a sufficient
4
interest in the decision with respect to which the appeal is made, or that he represents persons who have such an interest.
(3) The making of an appeal under this section does not suspend the effect of the decision to which the appeal relates.”
“(1) Any conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market is prohibited if it may affect trade within the United Kingdom.
(2) Conduct may, in particular, constitute such an abuse if it consists in -
(a)     directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b)    limiting production, markets or technical development to the prejudice of consumers;
(c)     applying dissimilar conditions to equivalent transactions with other trading partners, thereby placing them at a competitive disadvantage;
(d)    making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts.
…”
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2002, references in sections 46 and 47 of the 1998 Act to the OFT are to be read as including a reference to the Authority.
The WIA91
“2 General duties with respect to water industry
(1) This section shall have effect for imposing duties on the Secretary of State and on the Authority as to when and how they should exercise and perform the following powers and duties, that is to say –
(a)     in the case of the Secretary of State, the powers and duties conferred or imposed on him by virtue of the provisions of this Act relating to the regulation of relevant undertakers and of licensed water suppliers; and
(b)    in the case of the Authority, the powers and duties conferred or imposed on it by virtue of any of those provisions, by the provisions relating to the financial conditions of requisitions or by the provisions relating to the movement of certain pipes.
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(2A) The Secretary of State or, as the case may be, the Authority shall exercise and perform the powers and duties mentioned in subsection (1) above in the manner which he or it considers is best calculated –
(a)     to further the consumer objective;
(b)    to secure that the functions of a water undertaker and of a sewerage undertaker are properly carried out as respects every area of England and Wales;
(c)     to secure that companies holding appointments under Chapter 1 of Part 2 of this Act as relevant undertakers are able (in particular, by securing reasonable returns on their capital) to finance the proper carrying out of those functions; and
(d)    to secure that the activities authorised by the licence of a licensed water supplier and any statutory functions imposed on it in consequence of the licence are properly carried out.
(2B) The consumer objective mentioned in subsection (2A)(a) above is to protect the interests of consumers, wherever appropriate by promoting effective competition between persons engaged in, or in commercial activities connected with, the provision of water and sewerage services.
(2C) For the purposes of subsection (2A)(a) above the Secretary of State or, as the case may be, the Authority shall have regard to the interests of –
(a)     individuals who are disabled or chronically sick;
(b)    individuals of pensionable age;
(c)     individuals with low incomes;
(d)    individuals residing in rural areas; and
(e)     customers of companies holding an appointment under Chapter 1 of Part 2 of this Act, whose premises are not eligible to be supplied by a licensed water supplier,
but that is not to be taken as implying that regard may not be had to the interests of other descriptions of consumer.
(3) Subject to subsection (2A) above, the Secretary of State or, as the case may be, the Authority shall exercise and perform the powers and duties mentioned in subsection
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(1) above in the manner which he or it considers is best calculated—
(a)     to promote economy and efficiency on the part of companies holding an appointment under Chapter 1 of Part 2 of this Act in the carrying out of the functions of a relevant undertaker;
(b)    to secure that no undue preference is shown, and that there is no undue discrimination in the fixing by such companies of water and drainage charges;
(6A) Subsections (2A) to (4) above […] do not apply in relation to anything done by the Authority in the exercise of functions assigned to it by section 31(3) below (“Competition Act functions”).
(6B) The Authority may nevertheless, when exercising any Competition Act function, have regard to any matter in respect of which a duty is imposed by any of subsections (2A) to (4) above […], if it is a matter to which the Office of Fair Trading (in this Act referred to as “the OFT”) could have regard when exercising that function.
(7) The duties imposed by subsections (2A) to (4) above […] do not affect the obligation of the Authority or, as the case may be, the Secretary of State to perform or comply with any other duty or requirement (whether arising under this Act or another enactment, by virtue of any Community obligation or otherwise).”
“(3) The Authority shall be entitled to exercise, concurrently with the OFT, the functions of the OFT under the provisions of Part 1 of the Competition Act 1998 (other than sections 31D(1) to (6), 38(1) to (6) and 51), so far as relating to—
(a) agreements, decisions or concerted practices of the kind mentioned in section 2(1) of that Act,
(b) conduct of the kind mentioned in section 18(1) of that Act,
(c) agreements, decisions or concerted practices of the kind mentioned in Article 81(1) of the treaty establishing the European Community, or
(d) conduct which amounts to abuse of the kind mentioned in Article 82 of the treaty establishing the European Community, which relate to commercial activities connected with the supply of water or
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securing a supply of water or with the provision or securing of sewerage services.”
Inset appointments
that, for every area of England and Wales, there is, at all times (i) a company
holding a statutory appointment as a water undertaker; and (ii) a company
(which may or my not be the same company) holding an appointment as a
sewerage undertaker. In certain circumstances, the Secretary of State and/or the
Authority has the power to replace an existing statutory water undertaker with
another statutory water undertaker by way of an “inset appointment”, covering a
specified geographical area. Section 7 (as amended) is set out in full below:
“7 (1) It shall be the duty of the Secretary of State to secure that such appointments are made under this Chapter as will ensure that for every area of England and Wales there is at all times both –
(a)     a company holding an appointment under this Chapter as water undertaker; and
(b)    whether or not the same company in relation to the whole or any part of that area, a company holding an appointment as sewerage undertaker.
(2) Subject to the following provisions of this section—
(a)     the Secretary of State; and
(b)    with the consent of or in accordance with a general authorisation given by the Secretary of State, the Authority,
shall have power, by notice to a company holding an appointment under this Chapter, to terminate the appointment or to vary the area to which it relates.
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(3)    The appointment of a company to be a water undertaker or sewerage undertaker shall not be terminated or otherwise cease to relate to or to any part of any area except with effect from the coming into force of such appointments and variations replacing that company as a relevant undertaker as secure either—
(a)     that another company becomes the water undertaker or, as the case may be, sewerage undertaker for that area or part or for an area that includes that area or part; or
(b)    that two or more companies each become the water undertaker or, as the case may be, sewerage undertaker for one of a number of different areas that together constitute or include that area or part.
(4)    An appointment or variation replacing a company as a relevant undertaker shall not be made in relation to the whole or any part of the area to which that company's appointment as water undertaker or, as the case may be, sewerage undertaker relates except where –
(a)     that company consents to the appointment or variation;
(b)    the appointment or variation relates only to parts of that area none of the premises in which is served by that company;
(bb) the appointment or variation relates only to parts of that area and the conditions mentioned in subsection (5) below are satisfied in relation to each of the premises in those parts which are served by that company; or
(c)     the appointment or variation is made in such circumstances as may be set out for the purposes of this paragraph in the conditions of that company's appointment.
(5)    The conditions are that—
(a) the premises are, or are likely to be, supplied with not less than the following quantity of water in any period of twelve months:
(i) if the area of the relevant undertaker concerned is wholly or mainly in Wales, 250 megalitres;
(ii) in all other cases, 50 megalitres; and
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(b) the person who is the customer in relation to the premises consents in writing to the appointment or variation.
(6) The Secretary of State may, after consulting the Authority, make regulations amending subsection (5)(a) above by substituting, for the quantity of water for the time being specified there, such smaller quantity as he considers appropriate.”
in relation to inset appointments:
“8(1) An application for an appointment or variation replacing a company as a relevant undertaker shall be made in such manner as may be prescribed.
(2)    Within fourteen days after making an application under this section, the applicant shall—
(a)     serve notice of the application on the existing appointee the NRA1 and on every local authority whose area includes the whole or any part of the area to which the application relates; and
(b)    publish a copy of the notice in such manner as may be prescribed.
(3)    Before making an appointment or variation replacing a company as a relevant undertaker, the Secretary of State or the Authority shall give notice—
(a)     stating that he or it proposes to make the appointment or variation;
(b)    stating the reasons why he or it proposes to make the appointment or variation; and
(c)     specifying the period (not being less than twenty-eight days from the date of publication of the notice) within which representations or
1 The National Rivers Authority. According to Halsbury’s Statutes, Water (4th ed.), p. 730, this should be taken to refer to the Environmental Agency, which replaced the NRA in April 1996.
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objections with respect to the proposed appointment or variation may be made.
(4)    A notice under subsection (3) above shall be given—
(a)     by publishing the notice in such manner as the Secretary of State or, as the case may be, the Authority considers appropriate for bringing it to the attention of persons likely to be affected by the making of the proposed appointment or variation; and
(b)    by serving a copy of the notice on the existing appointee the NRA and on every local authority whose area includes the whole or any part of the area to which the proposed appointment or variation relates.
(5)    As soon as practicable after making an appointment or variation replacing a company as a relevant undertaker, the Secretary of State or the Authority shall—
(a)     serve a copy of the appointment or variation on the existing appointee; and
(b)    serve notice of the making of the appointment or variation on the NRA and on every local authority whose area includes the whole or any part of the area to which the appointment or variation relates,
and as soon as practicable after exercising any power to vary the area to which an appointment under this Chapter relates, the Secretary of State shall send a copy of the variation to the Authority.
(6)    In this section “the existing appointee”, in relation to an appointment or variation replacing a company as a relevant undertaker, means the company which is replaced in relation to the whole or any part of the area to which the appointment or variation relates or, where there is more than one such company, each of them.
(7)    The Secretary of State may by regulations impose such additional procedural requirements as he considers appropriate for any case where the conditions mentioned in section 7(5) above are required to be satisfied in relation to an application for an appointment or variation replacing a company as a relevant undertaker.”
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State when making inset appointments:
“9(1) Before making an appointment or variation replacing a company as a relevant undertaker, the Secretary of State or the Authority shall consider any representations or objections which have been duly made in pursuance of the notice under section 8(3) above and have not been withdrawn.
(2)    Before making an appointment or variation replacing a company as a relevant undertaker, the Secretary of State shall consult the Authority.
(3)    In determining whether to make an appointment or variation by virtue of section 7(4)(b) or (bb) above in relation to any part of an area, the Secretary of State or, as the case may be, the Authority shall have regard, in particular, to any arrangements made or expenditure incurred by the existing appointee for the purpose of enabling premises in that part of that area to be served by that appointee.
(4)    It shall be the duty of the Secretary of State or, as the case may be, of the Authority –
(a)     in making an appointment or variation replacing a company as a relevant undertaker; and
(b)    where he or it makes such an appointment or variation, in determining what provision is to be made with respect to the fixing by the new appointee of any water or drainage charges,
to ensure, so far as may be consistent with his or its duties under Part I of this Act, that the interests of the members and creditors of the existing appointee are not unfairly prejudiced as respects the terms on which the new appointee could accept transfers of property, rights and liabilities from the existing appointee.
(5)    In this section –
“existing appointee”, in relation to an appointment or variation replacing a company as a relevant undertaker in relation to any area or part of an area, means the company which is replaced by that appointment or variation;
“new appointee”, in relation to such an appointment or variation, means the company which by virtue of the appointment or variation becomes a relevant undertaker for the area or part of an area in question;
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“water or drainage charges” means
(a)     charges in respect of any services provided in the course of the carrying out of the functions of a water undertaker or sewerage undertaker; or
(b)    amounts of any other description which such an undertaker is authorised by or under any enactment to require any person to pay.”
which has applied for such an appointment may wish to seek a supply of water
from one of the other statutory water undertakers in order to serve its customers.
Such a supply of water is commonly referred to as a “bulk supply”. Under
section 40 of the WIA91 the Authority is empowered to order such a bulk
supply to be made and to determine the conditions of such a supply in certain
circumstances:
“40(1) Where, on the application of any qualifying person—
(a)     it appears to the Authority that it is necessary or expedient for the purposes of securing the efficient use of water resources, or the efficient supply of water, that the water undertaker specified in the application (“the supplier”) should give a supply of water in bulk to the applicant, and
(b)    the Authority is satisfied that the giving and taking of such a supply cannot be secured by agreement,
the Authority may by order require the supplier to give and the applicant to take such a supply for such period and on such terms and conditions as may be provided in the order.
(2)    In this section “qualifying person” means—
(a)     a water undertaker; or
(b)    a person who has made an application for an appointment or variation under section 8 above which has not been determined.
(3)    Where the application is made by a person who is a qualifying person by virtue of subsection (2)(b) above, an order made under this section in response to that application shall be expressed not to come into force until the applicant becomes a water
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undertaker for the area specified in the order, or for an area which includes that area.
(4)    Subject to subsection (3) above, an order under this section shall have effect as an agreement between the supplier and the applicant.
(5)    The Authority shall not make an order under this section unless it has first consulted the Environment Agency.
(6)    In exercising his functions under this section, the Authority shall have regard to the desirability of—
(a)  facilitating effective competition within the water supply industry;
(b) the supplier's recovering the expenses of complying with its obligations by virtue of this section and securing a reasonable return on its capital;
(c)  the supplier's being able to meet its existing obligations, and likely future obligations, to supply water without having to incur unreasonable expenditure in carrying out works;
(d) not putting at risk the ability of the supplier to meet its existing obligations, or likely future obligations, to supply water.”
OFT 422
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functions in the water and sewerage industries. Instead, the Act amends his duty in relation to competition.
2.6.   Specifically, the Act amends the Water Industry Act 1991 to provide that the Director should not have regard to his general duties when exercising any function under the Act, except that he may have regard to any matter to which the Director General of Fair Trading could have regard when exercising that function. This means, for example, that when imposing financial penalties under the Act the Director will take account of the statutory guidance issued by the Director General of Fair Trading, and will not have regard to his duty under the Water Industry Act 1991 to secure that undertakers are able to finance the proper carrying out of their functions.
2.7.   Where a particular agreement or practice falls within the scope of the Water Industry Act 1991 as well as one of the prohibitions in the Act, the Director is able to decide to use his powers under either the Water Industry Act 1991 or the Act. In such cases he will make use of whichever statutory powers he judges to be the more appropriate to address the specific conduct. Where he takes action using his powers under the Act, his duty to take enforcement action under the Water Industry Act 1991 does not apply. The Director will keep concerned parties informed regarding the statutory basis for his approach in handling a case.
2.8.   The Director may make use of information made available to him for the purposes of sector regulatory duties under the Water Industry Act 1991 in relation to the application of the Act, and vice versa. Information made available to the Director for sector regulatory duties may, for example, be material in providing reasonable grounds for suspecting an infringement prior to the initiation of an investigation under the Act. Where information obtained in performing any of his statutory duties gives rise to such reasonable grounds, the Director will initiate further investigations.
2.9.   The Director will seek to apply consistent policy principles to related subject matter irrespective of whether a matter is addressed through powers under the Competition Act or through his powers under the Water Industry Act 1991.”
IV THE FACTS
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the WIA91 (relating to greenfield sites) in order to be appointed the statutory water undertaker in relation to that site.
The period between January 2005 and November 2005
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IWC is a letter from the Authority dated 4 March 2005. In that letter the
Authority said, in relation to the possibility of using section 40 of the WIA91 in
order to determine the appropriate price for a bulk supply, that:
“…The Director would have to be satisfied that the terms of a bulk supply cannot be reached by agreement and that it appears that a bulk supply is necessary or expedient for the purpose of securing the efficient use of water resources or the efficient supply of water. Any party that approached us with a request for a determination under s40 WIA91 would have to come up with a strong case to support its arguments that the s40 criteria had been met. It is not clear to us that you have met this criteria and, from the information you have provided to date, whether the criteria are likely to be met by following your current line of reasoning. Our view is that it does not necessarily follow that a bulk supply in this case (as opposed to Bristol Water supplying the site direct) would be necessary or expedient for the purpose of securing the efficient use of water resources or the efficient supply of water.”
“Tariffs/Bulk Supply Price
In your 25 January 2005 letter you tell us that Bristol Water intends to charge its standard domestic volumetric rate for supplies of less than 20 Ml and one household standing charge at the point of connection to the Weston Road site. I agree that Condition E does not apply to bulk supplies between undertakers. Nonetheless, it may well be relevant in calculating a bulk supply price to refer to what Bristol Water would otherwise have charged these customers if IWC had not become the inset appointee and what Bristol Water would charge customers who use a comparable amount of water.
You suggest that Bristol Water avoids the need to invest in its network because IWC bears the cost of investing in the Weston Road site instead. You say that IWC, not Bristol Water, will adopt the new water infrastructure, and you argue that this should be reflected in a reduced volumetric charge to you for the water supply. We are not persuaded by this argument. At the periodic review, we have assumed in Bristol Water’s case that the infrastructure charges and developer contributions pay for on-site and off-site costs of new developments. Mike King makes this point in his email of 2 March 2005 to you. Whilst Bristol Water would avoid the obligations of owning the on-site infrastructure, a reduction in the volumetric rate in the bulk supply price is not necessarily the right way to reflect this. It
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may be more appropriately reflected as a reduction in the upfront charge (subject to my comments below) or expressed as an annual rate over a number of years.
Your points about undertakers needing to finance their functions and the Director’s duty to ensure functions are carried out and can be financed, are separate. The duty applies to the entire undertaker, rather than each individual investment that the undertaker might make.
Infrastructure charges
You argue that infrastructure charges should not be payable. First, our view is that each bulk supply is different and has to be treated on its details. Second, we believe it is reasonable for an incumbent to make an upfront charge for insets involving bulk supplies and/or sewer connections where the network reinforcement costs imposed by the development are not altered by interposing an inset appointment at the point of connection. This charge should cover the costs to Bristol Water of enhancing the local network as a direct consequence of providing bulk supply to IWC. So the upfront charge may be equivalent to the whole or a proportion of any infrastructure charges or network reinforcement charges that the water undertaker would have levied if there had been an inset.
Finally, I understand that you intend to submit an updated draft inset application. I reiterate the comments made by Paul Morris in your telephone conversation of 18 February 2005. IWC should publish notice of the application once Ofwat has confirmed to it that the draft application is complete. To help move this forward we intend to write separately to IWC outlining outstanding information required to satisfy the application criteria. This will include the regulatory and operational issues that IWC will need to satisfy before we could recommend to the Director that he grants the inset appointment.
For example, I understand that infrastructure will be in place to enable the supply to the first houses (to be occupied at the end of April) and that more houses will be built at a later date in a phased approach. The spine main that will run through the centre of the site will be in place in about 18-24 months’ time. As part of the inset application process, we need to know that the inset applicant has (amongst other things) the ability to supply water to end customers. A part of this process, we will need to know what impact the phasing of the development will have on IWC’s ability to carry out and finance its functions as an undertaker.”
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Bristol Water’s approach to setting prices for Bulk Supply Agreements to potential competitors. IWC requested the Authority to impose interim measures under section 35 of the 1998 Act.
20
21
The period from November 2005
22
actual costs of supply; and agreement from Bristol Water to provide an immediate mains connection to the site.
(a) “set-up charge”: IWC argued that the development was, as a brownfield site, exempt from charges under section 146 of the WIA91 and that all costs of necessary local enhancements to the local distribution system had already been paid for by GWB. IWC further argued that the set-up charge imposed by Bristol Water did not reflect actual costs incurred or
23
the economic value of the services provided. IWC therefore submitted that the request for a set-up charge amounted to excessive pricing and predatory behaviour;
(b)    “volumetric charge”: IWC argued that Bristol Water was incorrect to treat IWC in the same manner as their other customers, rather than as a competitor of Bristol Water. IWC explains that Bristol Water, in denying that it would avoid costs because of IWC’s inset appointment, had ignored that a new water undertaker is required by law to invest capital into a new water main and, if it did not retain the infrastructure charge, IWC would be discriminated against. As statutory undertaker, IWC would be responsible for bad debt from the houses within the development. Bristol Water would also no longer be responsible for costs, including operational costs such as customer service activities, billing, communications, handling complaints, publications, meter maintenance, reading and capital costs associated with meter replacements and network upgrades. IWC would also be responsible for leakage on the new network. Taking account of these factors, IWC argued that Bristol Water’s insistence on charging the published tariff amounted to discriminatory and predatory behaviour;
(c)     “refusal to allow access to an essential facility/service”: IWC argued that Bristol Water’s refusal to grant a connection as a connection to a “private water network” amounted to a refusal to grant access to an essential facility;
(d)    “other items”: IWC argued that Bristol Water had “obstructed the development of competition through a number of other methods”, including: procrastination in responses to IWC, including delivery of the bulk supply agreement; outright refusal to assist UTS on the grounds that they would not help a company “competing with” Bristol Water; insistence on a boundary meter at the Weston Road site at the cost of IWC, which was discriminatory against IWC; attempting to thwart IWC’s inset application through challenging IWC’s technical competence with its customers and others in respect of the design and construction of the mains pipes laid at the site; attempting to influence
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GWB and the Authority through adverse comment and obstructive interference; charging GWB a predatory and excessive price for the provision of its new water main connection; and providing a quote to UTS in relation to a mains connection for Manor Farm, Bradley, Stoke which was significantly higher than a quote submitted to Barrett Homes in relation to the same site.
(a)     For Bristol Water to pay compensation for the costs involved in providing the static tank supply of water to the Weston Road site;
(b)    For Bristol Water to pay for any fees of specialist and professional advice which may be required during the complaint.
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application when it received confirmation on 4 November 2005 that IWC wished to continue with that application.
(a)     the Authority asked IWC to confirm whether its letter of 13 November 2005 was to be taken as meaning that IWC had withdrawn its inset application;
(b)    the Authority offered to meet IWC to discuss IWC’s general concerns about the inset application process;
(c)     the Authority asked IWC to clarify its interim measures application.
(a) Whether or not it would be appropriate for interim measures to be adopted for the purposes of protecting the public interest in the
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circumstances pertaining to the Weston Road site (the interim measures issue); and
(b) Whether or not there was any support for the proposition that the Authority was empowered by the 1998 Act to force Bristol Water to consent to an inset appointment for Albion (the forced consent point).
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(a)     Confirming that it was withdrawing its request for interim measures to cover the cost of the temporary supply;
(b)    Confirming that it continued with its request for interim measures to cover costs of specialist advice and legal counsel;
(c)     Explaining that since IWC has been forced into a situation whereby a mains connection was required before the inset application had been properly considered and processed, IWC was no longer in a position to apply for an inset appointment under the greenfield criteria. IWC was therefore requesting that Bristol Water undertake to allow an inset appointment by consent under section 7(4)(a) of the WIA91;
(d)    Reminding the Authority that IWC’s competition complaint of 20 May 2005 included a complaint based on the methodology employed by Bristol Water in relation to the bulk supply agreement for the Weston Road site. On 6 June 2005 IWC had agreed to withdraw that complaint in exchange for expedition from Bristol Water in the creation of a bulk supply agreement, which was necessary for pursuance of its inset application. The final conditions offered by Bristol Water were identical to those described in the complaint.
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available as soon as IWC could demonstrate that it had tried and failed to reach agreement with Bristol Water; (iii) the WIA91 did not require a determination that the price offered by Bristol Water was excessive, nor would any determination be limited to imposing a maximum price set by reference to the concept of excessive pricing. In relation to the aspects of the complaint which concerned connection to a mains supply, the Authority considered that that concerned Bristol Water’s supply duties under the WIA91 and could be resolved using that legislation.
Interim measures
We do not consider that the Director has the power under section 35 of the Competition Act 1998 (“the CA98”) to impose interim measures requiring an undertaking alleged to be infringing the CA98 to fund the costs of a complainant. We therefore refuse your application for interim measures in that respect. We further note that you have not demonstrated, or even produced any evidence, that such funding is necessary to enable you to pursue your complaint.
You appear to request a further interim measure requiring Bristol Water plc (“Bristol Water”) to consent to an inset appointment by you for the Weston Road site, including premises Bristol Water will be supplying when the connection requested at the 11 November meeting is made (“the Relevant Premises”). We have not reached a decision on your new application, but our current thinking, on which you are invited to comment, is that an interim measure requiring Bristol Water’s consent would not be appropriate. This is because
29
your application (in so far as it needs to be based on an area including the Relevant Premises) could not safely be based on some form of interim consent by Bristol Water, which it could retract if we found that its refusal of consent was not an infringement of the Chapter II prohibition. It would follow that interim measures could not have the effect of preventing serious or irreparable damage to you or any other person or harm to the public interest because they would not materially assist your position.
In relation to the last paragraph of your letter, it is of course for you to establish your case for interim measures and it is not for us to prescribe the way(s) in which you have to do so. General guidance on interim measures is set out in the OFT guideline Enforcement, a copy of which is enclosed.
Clarification of your complaint
We note what you say about your complaint, although we have no record or knowledge of any telephone conversation with you on 14 November 2005. We of course accept that you are entitled to complain about the bulk supply terms you accepted this summer. However, as you yourself say, your original complaint was withdrawn on 6 June, and at least 3 months elapsed between your acceptance of the terms about which you now complain and your renewed complaint, it is plainly potentially relevant to questions of urgency.”
Williams (solicitors for Bristol Water) in the following terms:
“First, we do not agree with your argument that the existence of specific provisions in the Water Industry Act 1991 (“WIA91”) to deal with the determination of bulk supply prices and terms precludes the Director from taking action, in relation to a water undertaker’s conduct concerning a bulk supply, under the Competition Act 1998 (“CA98”) where appropriate. In our view, the Director has discretion in such circumstances as to how to proceed. In relation to the complaint by Albion Water Limited (“Albion Water”), the Director has already told Albion Water that, for reasons explained to it and copied to you, he will not look at Albion Water’s complaint about a bulk supply under the CA98; and in the present case he has also told Lanara Group plc (“Lanara”), subject to its comments, that he is minded to take the same approach in relation to its complaint. But in other circumstances, the Director might well decide to look at a complaint about a bulk supply under the CA98 even if the relevant provisions of the WIA also applied.
Secondly, we note that you have not explained what express or implied contractual terms you rely on as a basis for your assertion that Lanara are bound not to complain to the Director
30
about the terms of a bulk supply from Bristol Water. Nor have you explained what matters of fact you rely on to found an estoppel. In any event, we should say that we do not consider that it is legally possible for Lanara to waive its ability to complain to the Director about matters falling within his remit. Any such contractual term or waiver would, in our view, be void as a matter of public policy. It follows that Lanara could not be estopped from raising any such matters before the Director. Finally, no such contractual provision or estoppel could apply to the Director or prevent his taking such action as he considers appropriate.”
consider that, in its current status, it would be able to satisfy the Authority’s
“revised” financial status requirements for the proposed inset application until it
had made appropriate financial arrangements. Furthermore, substantial delays
had resulted in the site being disqualified as a greenfield site. IWC would
therefore be formally withdrawing its inset application based on the greenfield
site criterion but would reconsider its position once the full implications of the
investigation under the 1998 Act had been identified, specifically in relation to
the requirement for a dominant undertaker to allow inset appointments by
consent. IWC also took the opportunity to clarify its complaint under the 1998
Act:
“In your analysis of our complaint you seem to have omitted some crucial factors that define the nature of the complaint. Whilst you are correct in stating that it includes the terms of the Bulk Supply Agreement and issues surrounding the connection of the site to a mains water supply, there is far greater substance and breadth to our complaint than you seem to suggest.
Our complaint, in fact, alleges a pattern of conduct by BRL that amounts to an abuse of its Super-Dominant position. In our letter of complaint we have outlined no less than 10 examples of conduct by BRL that warrant investigation, this is clearly a pattern. The two areas that you mention may be the most commercially obvious but are, in fact, only part of a string of incidents that make up our complaint. To limit the investigation to the two areas that you mention would, we believe, be an error of law or procedure as competition case law requires that an adequate investigation should consider a pattern of conduct.
Whilst we recognise the differences in the requirements between a Determination under Sections 40 and 40A of the
31
WIA91 and an investigation under the CA98, we would like to bring to your attention a number of key points:
       Our complaint in respect of the commercial terms is not such that we are requesting you to determine a specific set of financial terms. We are complaining that the terms as offered by BRL and as a part of a pattern are anti-competitive and therefore an abuse of their super-dominant position. Because we are not seeking a specific price determination, we believe that consideration under the WIA is quite inappropriate.
       The powers of the Director under Sections 40 and 40A of the WIA91 would deal with the price issues and other conditions of the proposed Bulk Supply Agreement. However, it would not lead to an appropriate investigation of the pattern of abuse that has emerged over the last 11 months.
       You attempt to classify other elements of our complaint into the generic phrase "connection of the site to a mains water supply, and associate infrastructure issues". This is a complete misrepresentation of our complaint. Again, we have brought to your attention a pattern of behaviour exhibited by BRL that, we believe, amounts to an abuse of their Super-Dominant position.
       Considering the withdrawal of IWC’s proposed Inset Application, there is no longer a Bulk Supply Agreement that could be the centre of a determination under Sections 40 and 40A of the WIA91. These sections are therefore no longer relevant.
       We note your preference for a more flexible remedy than would be available using the CA98 by proposing the use of powers under Section 30A of the WIA91. However, again, these powers are not adequate to investigate the pattern of abuse that has been disclosed to you by us.
I would therefore refer you back to our letter of complaint dated 7th November 2005 and request that you reconsider your apparent reluctance to use the Director's powers under the CA98.
In a letter written to you on 29th September 2005, Alan Parsons, the Chairman of BRL, stated that the margin offered by BRL to IWC in the Bulk Supply Agreement is insufficient for IWC to operate profitable, i.e. not meeting the costs of on-site leakage, water quality monitoring, customer services, overheads and maintenance.
We believe that this letter on its own constitutes clear evidence that an abuse of a dominant position has taken place.”
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“Returning to your letter of the 25th November you ask us to specifically respond to paragraph two. The withdrawal of our Inset Application should now clarify our position in relation to the issue of an "Inset via Consent" as a possible interim measure. However for the record we do not recall specifically requesting such a measure to be considered as part of our original competition complaint.
You state that we have not demonstrated, nor even produced any evidence, that any funding is necessary to pursue our complaint. However, we asked you in our letter of 13th November 2005 to provide us with some guidance as to what form of evidence would be suitable for demonstrating exactly that. Your observation that we have not produced any evidence is therefore merely a reflection of the fact that we have had no advice or guidance from you on this matter, and reinforces your previous advice that we obtain specialist legal advice.
We are therefore again requesting that you offer us clear guidance as to what form of evidence you require for us to support our request for interim relief.”
acknowledged IWC’s decision to withdraw its inset application and responded
to IWC’s comments as regards the Authority’s financial requirements. The
Authority insisted that its financial requirements had not changed during the
process. The Authority considered that despite guidance and detailed feedback
from the Authority, IWC had failed to meet the standards required of a water
undertaker. The second letter, which is central to this appeal, responded to
IWC’s complaint about Bristol Water. The substance of that letter is set out
below:
“You complained about the terms and prices at which Bristol Water is prepared to offer a bulk supply and the terms of connection to its network. In your letter you also say that you will reconsider your decision to withdraw your inset appointment application if Bristol Water is required under CA98 to give consent to an inset appointment under section 7(4)(a) WIA91.
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You are aware that a complaint has also been made against Bristol Water by Albion Water Limited (Albion Water) in relation to Albion Water's proposal to make an inset appointment application for this site. Albion Water has complained about Bristol Water's refusal to give consent to an inset appointment under section 7(4)(a) WIA91, as well as about bulk supply and connection terms from Bristol Water.
As to the section 7(4)(a) WIA91 issue, we have told Albion Water that we shall postpone our consideration of whether refusal to give consent should be considered under Chapter II of the CA98 until after resolution of the bulk supply issue and consideration of its inset application. We decided on that step by step approach because the issue of refusal of consent becomes essentially academic if there is in fact no prospect of a viable inset appointment in any event. Our view is that any concerns as to the terms and prices on which Bristol Water is prepared to offer a bulk supply and as to the terms of connection to its network are better addressed under WIA91.
Nothing in your 1 December letter changes our view that this step by step approach is most appropriate. Our view remains that concerns about Bristol Water's refusal to give consent under section 7(4)(a) WIA91 should not be addressed before it becomes clear that that refusal is likely to preclude an inset application for the site that would otherwise succeed.
As to issues involving the terms and prices at which Bristol Water is prepared to offer a bulk supply and connection to its network, we shall to some extent be considering the relevant issues that arise in our exercise of powers under the WIA91 in response to Albion Water's complaint. Against that background, and particularly as you have now withdrawn your application for an inset appointment, we do not regard it as appropriate at this stage to devote resources to considering whether Bristol Water has infringed the CA98 in its dealings with you on those matters.
You should note that we are not obliged to investigate every potential infringement of the CA98 that is drawn to our attention, particularly where, as here, other powers are available to us to deal with key aspects of the concerns that have been raised. In your 1 December letter you say that your concerns should be seen in the context of a number of other matters, which amount to a pattern of conduct by Bristol Water that infringes Chapter II of the CA98. We agree that as a general proposition it may well be appropriate in a case under Chapter II of the CA98 to look at allegedly infringing behaviour in the context of other behaviour by the same undertaking; nonetheless, looking at the matters that you and Albion Water have raised in the round, we take the view, for
34
the reasons we have given, that our approach is the appropriate response to the issues you have each raised.
Interim relief
In our letter of 25 November, we refused your application for interim relief requiring Bristol Water to fund the costs of your complaint. You do not address the first point we made in that letter, namely that the Director does not have the power to impose such a measure under section 35 CA98. We therefore see no reason to re-open our decision on that point.
As to our further point that you had produced no evidence that you needed such funding, it is not possible for us to give you further guidance as to how you might go about showing that such funding is necessary. You plainly consider that such funding is necessary, so you should be able to set out the basis on which you reached that view. However, it is a matter for you whether you wish to do so given our view that the Director has no power in any event to grant the interim measure you seek. General guidance on interim measures is set out in the OFT guideline Enforcement, a copy of which was sent to you under cover of my 25 November 2005 letter to you.
I would be grateful if you could inform me by 5pm on Thursday 8 December 2005 what, if any, concerns you have about us copying this letter and your letter dated 1 December to Bristol Water.”
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(b)    Decided to use his powers under the Water Industry Act 1991 to investigate only certain very limited aspects of the concerns raised by the applicant.
(c)     As a result of the applicant withdrawing from the contended market, decided it would be inappropriate to devote resources to considering whether Bristol Water plc (BRL) has infringed the Chapter II Prohibition in the Competition Act 1998 in its dealings with the applicant.
2.      The applicant contends that these decisions are incorrect from the point of view of (i) the reasons given, (ii) the law applied, (iii) the procedure followed.
3.      The applicant contends that BRL's behaviour in this and related matters has effectively prevented the applicant from honouring its commitments to GWB Limited (GWB). The applicant believes that BRL have prevented any viable commercial arrangement that would allow it from becoming the statutory water undertaker for the development on Weston Road in Long Ashton, North Somerset.
4.      Furthermore, the applicant also contends that, in preventing competition, BRL have severely damaged the financial viability of the applicant and its subsidiaries.
5.      Therefore the applicant is unable to pursue its legitimate commercial objectives relating to this matter as a result of the Director's decisions in 1 above. The applicant consequently asks the tribunal to consider the validity of the decision by the Director not to investigate this matter under the Competition Act 1998.”
The Decision
The Decision is contained in the letter from Ofwat's Head of Competition Policy dated 7th December 2005. It is clear that the Director does not intend to investigate the current complaint filed by the applicant, stating that they feel that using the Water Industry Act 1991 is the appropriate response. We believe that Ofwat's latter insistence to investigate, under the WIA 1991, the alleged abuses and concerns raised by the applicant is an error in law or fact, as the WIA 1991 does not provide sufficient jurisdiction to cover all the alleged abuses and would therefore not allow appropriate investigatory powers or result in a reasonable remedy.
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82.       In terms of relief, IWC requested:
Relief Sought
The Applicant seeks the following relief:
1.      That the Director General of Water Services reconsider his decision not to investigate the allegations made by the applicant against Bristol Water plc in their entirety and using his powers under the Competition Act 1998.
2.      That, considering the length of time that he has been in possession of the facts of this case (since 20th May 2005) the Director General of Water Services agrees to investigate the matter fully within a three month period.
3.      That the Tribunal offer guidance to the Director General of Water Services as to which areas would be most appropriate to investigate.
4.      Such further and other relief as the Tribunal may consider appropriate.”
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and conditions of bulk supply in relation to Albion’s inset application under the WIA91.
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Court of Appeal in the case of Corner House v Secretary of State for Trade and Industry [2005] EWCA Civ 192 and was not an order that was within the Tribunal’s powers to grant.
V THE PARTIES’ SUBMISSIONS ON ADMISSIBILITY
IWC’s submissions
(a)     A letter from Ofwat to IWC of 4 March 2005;
(b)    A note of a meeting between the Authority and Bristol Water on 30 March 2005;
(c)     IWC’s letter of 20 May 2005, headed “Complaint under Competition Act 1998 - Breach of Chapter II Prohibition”;
39
(d)    The exchanges between IWC and the Authority, commencing on 20 May 2005 in relation to the complaint which was subsequently withdrawn;
(e)     The Authority’s letter of 25 November 2005 dealing, in particular, with IWC’s request for interim measures;
(f)     The Authority’s letter of 7 December 2005 (the case closure letter).
40
41
against the totality of what had occurred to it at the hands of the Authority, i.e. to appeal the whole content of the case closure letter, which included reference to interim relief. IWC notes that the notice of appeal included a request for further and other relief and submits that these words should be read to embrace the Authority’s refusal to grant interim relief. IWC relies on the content of its letter to the Registrar of the Tribunal dated 13 February 2006 to evidence IWC’s intention with regard to the scope of the notice of appeal.
The Authority’s submissions
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related subject matter under both the 1998 Act and the WIA91. However the Authority submits that because the legislative provisions are different, there can be no guarantee that the application of the WIA91 will necessarily produce an identical result to the application of the 1998 Act.
(a)     In applying section 40, the Authority is required to take specific matters into account under section 40(6);
(b)    A section 40 determination is not dependent on any finding of dominance or effect on trade;
(c)     Whereas section 40(1) contemplates the setting of particular terms (including particular terms as to price), general competition law does not prescribe a particular price but rather sets a ceiling (excessive price/margin squeeze) or a floor (predatory pricing) on prices that a dominant undertaking may charge. So, for example, the Authority might impose a particular price in a section 40 determination on the basis of certain costs assumptions or allocations, even though it could not be said that a dominant company would not have been entitled to make different but reasonable costs assumptions or allocations, and charge a higher price or lower price, without thereby abusing its dominant position by excessive pricing/margin squeeze or predatory pricing.
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Dairies v DGFT [2003] CAT 3, where the Authority had been investigating for some 2 to 3 years.
112.     The Authority submits that a regulator has a wide discretion – though not “absolute” in the sense that it is immune from judicial scrutiny – as to whether to investigate issues under section 25 of the 1998 Act that are brought to its attention, whether to look at those matters under other powers, or not to take any action. The Authority submits that it is vital that that proposition be maintained in order to permit it to prioritise cases in accordance with its views as to the public interest and the resources available to it. The Authority relies in this regard on Aquavitae, cited above, at paragraph 205. It also points to Case T-24/90 Automec II [1992] ECR II-2223 at paragraphs 75 to 76.
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(a)     That argument is only relevant to the bulk supply aspect of the 8 November 2005 complaint. It cannot help in establishing an appealable decision in relation to the other heads of complaint.
(b)    The 4 March letter was written in a context where the 1998 Act had not been invoked and the Authority was thinking solely in terms of a determination under section 40 of the WIA91. The letter therefore provides no evidence to support the proposition that the Authority asked itself a question under the 1998 Act or reached a view as to the application of that Act to the question of the appropriate bulk supply price.
(c)     Further, it is simply wrong to assume that any view reached as to the way in which section 40 might apply (and it must be remembered that no section 40 determination was ever initiated) necessarily “reads across” to the 1998 Act. In applying section 40, the Authority is not to be regarded as bound to apply, or as necessarily applying, the same analysis that it would apply under the 1998 Act.
(d)    Indeed, it would be extraordinary if the expression of a view as to the approach that might be adopted in relation to the exercise of a regulator's powers under sector specific legislation such as the WIA91 – in relation to which Parliament has not given the Tribunal any appellate role –
45
should be taken as indicating that the regulator must in some way automatically have reached the same view under the 1998 Act and hence that an appealable decision under the 1998 Act has been made. If such an argument were right, any view as to a competition related issue in the broadest sense taken by a regulator under its sectoral powers would automatically be converted into an appealable decision under the 1998 Act. Such an argument would entirely subvert the decision that has plainly been taken by Parliament not to confer an appellate role on the Tribunal in relation to that legislation.
(e)     Further, any attempt to expand the jurisdiction of the Tribunal by such reasoning would inevitably create considerable uncertainty as to what decisions by regulators under sectoral regulation were appealable under section 46 of the 1998 Act and, as a result, make it difficult for those who wished to challenge such decisions to be sure how to proceed.
(f)     IWC is guilty of selective quotation; it has omitted to quote the later part of the 4 March 2005 letter where it is made clear that the Authority's position at that point was simply that a reduction in the bulk supply price was “not necessarily the right way to reflect” the point that Bristol Water saved infrastructure costs if the Appellant was appointed as the undertaker for the site. That shows that the Authority had not, in any event, reached a decided view on the point.
(a)     The answer to the question of what impact Regulation 1/2003 might have on the Authority’s duties in a situation such as the present cannot affect the answer to the question of jurisdiction now before the Tribunal, namely whether the Authority did reach a view as to the application of general competition law (not whether it ought to have done so).
(b)    It is impossible to see how Regulation 1/2003 can affect the question of how, as a matter of national law, jurisdiction is split as between the Administrative Court and the Tribunal given in particular that on any
46
view the judicial supervision exercised by the Administrative Court is sufficient to meet the standards of Community law.
47
125.     The Authority refers to Rules 8 and 11 of the Tribunal’s Rules, to the Tribunal’s Guide to Proceedings, October 2005 at paragraph 6.14 and 6.44 and to the Order of the President in Prater v OFT [2006] CAT 11, all of which emphasise the exceptional nature of the discretion to extend time. The Authority submits that there is an underlying policy that it is important that any decision taken by a regulator either turns out to be final and unappealed, or is subject to appeal as soon as possible and within the two-month limitation period.
Interveners’ submissions
- Bristol Water
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- Albion Water
VI THE TRIBUNAL’S ANALYSIS
The WIA91
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(a)     where the incumbent undertaker does not serve any of the premises in the area to be covered by the additional appointment. This is referred to as the greenfield site exception.
(b)    where the incumbent undertaker “consents to the appointment or variation”. This is referred to as the “incumbent consent” exception.
(a)     to have regard to any arrangements made or expenditure incurred by the existing appointee for the purpose of enabling premises in that part of that area to be served by that appointee;
(b)    to ensure, so far as may be consistent with its duties under Part 1 of the WIA91, that the interests of the members and creditors of the existing appointee are not unfairly prejudiced as respects the terms on which the new appointee could accept transfers of property, rights and liabilities from the existing appointee.
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Authority has to have regard to the desirability of certain factors set out in section 40(6), including facilitating effective competition within the water supply industry.
2 Whilst IWC submitted various documents purporting to be applications for an inset appointment in respect of the Weston Road site, it appears from the correspondence that the Authority treated them all as draft applications, on which it gave feedback which highlighted what the Authority considered to be deficiencies in the documents.
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The 1998 Act
52
Is there an appealable decision?
“206. In normal circumstances, where the OFT or a concurrent regulator has expressly indicated that they will consider a complaint on its merits, the Tribunal will expect that investigation to reach an outcome. If the outcome of that investigation is to close the file, the Tribunal will normally infer that that is because there is insufficient evidence of infringement. In most cases the result will be
53
an appealable decision, in accordance with the principles now established in BetterCare, Freeserve and Claymore, cited at paragraph 5 above. As Claymore makes clear, at paragraphs 124 to 146, the drafting of the case closure letter is unlikely to deflect the Tribunal if the substance of the matter is a finding of insufficient evidence of infringement. Moreover, the inference that the case has been closed because the relevant regulator has concluded that an infringement is not established will normally be irresistible if, at an earlier stage, the regulator has already expressed a view to the effect that he sees little merit in the case.”
“122. In our view the main principles to be derived from BetterCare and Freeserve are:
(i) The question whether the Director has “made a decision as to whether the Chapter II prohibition is infringed” is primarily a question of fact to be decided in accordance with the particular circumstances of each case (BetterCare, [24]).
(ii) Whether such a decision has been taken is a question of substance, not form, to be determined objectively, taking into account all the circumstances (BetterCare, [62], [84] to [87], and [93]). The issue is: has the Director made a decision as to whether the Chapter II prohibition has been infringed, either expressly or by necessary implication, on the material before him? (Freeserve, [96]).
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(iii) There is a distinction between a situation where the Director has merely exercised an administrative discretion without proceeding to a decision on the question of infringement (for example, where the Director decides not to investigate a complaint pending the conclusion of a parallel investigation by the European Commission), and a situation where the Director has, in fact, reached a decision on the question of infringement, (BetterCare, [80], [87], [88], [93]; Freeserve, [101] to [105]). The test, as formulated by the Tribunal in Freeserve, is whether the Director has genuinely abstained from expressing a view, one way or the other, even by implication, on the question whether there has been an infringement of the Chapter II prohibition (Freeserve, [101] and [102]).”
(a)     Did the Director ask himself whether the Chapter II prohibition has been infringed?
(b)    What answer did the Director give to that question when making his decision?
“151. On that approach, the Director’s decision in this case is to be contrasted with other kinds of decisions to close the file, such as where the Director, without going into the merits, decides not to open an investigation because he has other cases to pursue in priority (the situation dealt with by the Court of First Instance in Automec, cited above); because he has decided to make a market investigation reference to the Competition Commission under the Enterprise Act 2002; because another competition authority is investigating the matter; because of the possible effect on criminal proceedings under section 188 of the Enterprise Act 2002; or for some other reason which does not involve him taking a considered position on the merits of the case.”
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on the introduction of a statutory scheme for retail licensing envisaged by the Water Bill rather than pursuing a complaint under the 1998 Act constituted a genuine independent reason for closing the file and that no decision as to whether the Chapter II prohibition had been infringed had been taken.
(a)     That the draft inset applications which had been submitted by IWC were founded on the Weston Road site being a greenfield site.
(b)    IWC had submitted a number of versions of a draft inset appointment application to the Authority, but the Authority was not satisfied that IWC could meet the standards required by it to show that IWC was financially, operationally or technically viable on the basis of the drafts it had seen.
(c)     That by November 2005, given that certain houses on the Weston Road site were by that stage occupied and needed to be provided with mains water (the DWI having raised serious concerns about provision of water via a static tank), there was no alternative but for Bristol Water to provide an immediate mains water supply to the site.
(d)    As a result, GWB and Bristol Water agreed at the “all parties” meeting on 11 November 2005 that the latter would provide a water supply to the Weston Road site.
(e)     Once Bristol Water provided a mains connection on 5 December 2005 it became the incumbent water undertaker.
(f)     The site could therefore no longer be classified as a greenfield site.
(g)    By December 2005 IWC’s inset application as submitted was accordingly bound to fail and was therefore withdrawn.
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(h) Any future inset appointment for the Weston Road site would require the consent of the incumbent water undertaker.
(i) Bristol Water had decided not to offer “incumbent consent” to whomever GWB chose to supply the site in the long term.
(j) Accordingly, any future inset application by IWC was also now bound to fail, even if IWC could satisfy the Authority of its suitability to be a water undertaker, unless Bristol Water could be required to offer “incumbent consent”.
(a)     whether Bristol Water’s request for a set up charge amounted to excessive pricing and predatory behaviour prohibited by Chapter II of the 1998 Act.
(b)    whether Bristol Water’s insistence on charging the published tariff amounted to discriminatory and predatory behaviour.
(c)     whether Bristol Water’s behaviour during the 11 months in its dealings with IWC amounted to an infringement of the Chapter II prohibition.
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58
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Implications of proceeding to consider interim measures
Regulation 1/2003
provides, so far as relevant:
“Where the competition authorities of the Member States or national courts apply national competition law to agreements, decisions by associations of undertakings or concerted practices within the meaning of Article 81(1) of the Treaty which may
60
affect trade between Member States within the meaning of that provision, they shall also apply Article 81 of the Treaty to such agreements, decisions or concerted practices. Where the competition authorities of the Member States or national courts apply national competition law to any abuse prohibited by Article 82 of the Treaty, they shall also apply Article 82 of the Treaty.”
Conclusion on the question of appealable decision
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IWC’s attempt to appeal in respect of interim measures
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“11 (1) The appellant may amend the notice of appeal only with the permission of the Tribunal.
(2) Where the Tribunal grants permission under paragraph (1) it may do so on such terms as it thinks fit, and shall give such further or consequential directions as may be necessary.
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(3) The Tribunal shall not grant permission to amend in order to add a new ground for contesting the decision unless—
(a) such ground is based on matters of law or fact which have come to light since the appeal was made; or
(b)  it was not practicable to include such ground in the notice of appeal; or
(c) the circumstances are exceptional.”
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this complaint which might give rise to exceptional circumstances. Accordingly, we do not consider it appropriate to permit IWC to amend its notice of appeal to include a ground of appeal relating to a refusal to give an interim measures direction under section 35.
VII CONCLUSION
Marion Simmons QC                       Michael Blair QC                            Ann Kelly
Charles Dhanowa                                                                       26 January 2007
Registrar
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