Hugh Mercer on the appeals of two water companies against the Office of Water Service's determination of prices

Is the difference between the Competition Commission (CC) and the Mergers and Monopolies Commission (MMC) more than just the name? The decisions published this month on the appeals by two water companies against the Office of Water Service's (Ofwat) determination of prices are certainly a departure from the MMC's previous decisions in the water sector. The excellent results of the enquiries for the companies, the substantial modifications to Ofwat's determinations of water prices, and the award of costs to the companies concerned are matters of record. What is of real interest is the process by which these were achieved.

The format of occasional oral hearings over the six-month enquiry remained, but included a joint hearing attended by Ofwat and interested parties. The style was refreshingly different from competition hearings before the European Commission: although as in all judicial review cases the public body (Ofwat) started ahead, the CC members listened, and their views changed. Advocacy needed to be pithy and to the point, supported by one-page notes setting out the issues; but it was more in the mould of the proposals for the Competition Commission Appeal Tribunals than the truncated style necessary before the Court of First Instance or the European Court of Justice.

Prior to the last hearing, the CC had supplied a draft of its determination to permit a focussed discussion and to enable the company to correct some misleading impressions, although outstanding issues remain. One such issue is the degree to which a decision should be reasoned when it is rejecting bottom-up data collected by the company: to what extent can top-down material such as economic models overrule company material? And perhaps most importantly, does the commission have an obligation to tell the company how it should bridge the gap between its "target" and company/industry data, where the data indicates that the target cannot be achieved.

Overall, the result demonstrated that the CC did provide a real appeal in this case and, whether inspired by the Human Rights Act or not, its procedure is certainly evolving for the better.

Hugh Mercer is a barrister at Essex Court Chambers.