Tesco case breaks new ground as CAT chief shows bargaining powers
16 March 2009
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Is the Competition Appeal Tribunal (CAT) changing tack? Under new president Gerald Barling it made history last week when it found for Tesco against the Competition Commission.
And, in another break with tradition, Barling is also set to launch the CAT’s first users’ committee – something that would have been unheard of under his predecessor.
Christopher Bellamy, the first chair of the CAT, left to join Linklaters in 2006. His undisputed legacy to the fledgling tribunal was to give it a distinctive voice in the competition landscape. Indeed, the CAT rapidly developed a reputation for giving the Office of Fair Trading (OFT) a kicking, but as one lawyer observes: “He was fairly even-handed in giving regulators and appellants a beating in the tribunal.”
“Under Bellamy it was probably trying to develop a profile and trying to assert itself,” says another City competition partner. “It wanted to tell people it was there and assert jurisdiction.”
Another notes: “Barling is probably more pragmatic in his approach. He’s less of a crusader than Bellamy.”
Perhaps Barling is less territorial because of his other job sitting in the High Court; certainly, competition lawyers are already seeing the launch of a users’ committee as an inclusive act. And the committee will clearly be needed, given the prospect that other types of competition cases may be transferred from the High Court to the CAT.
If the CAT made its name beating up the OFT, last week’s Tesco decision was almost as significant. It found against the Competition Commission for the very first time.
“The age of deference is over,” quips one City partner.
In its judgment the CAT said that the commission did not “fully and properly assess and take account of the risk that the application of the test might have adverse effects for consumers as a result of their being denied the benefit of developments which would enhance their welfare”.
That said, the tribunal judges stressed that, while finding in favour of Tesco, their conclusions “do not preclude the possibility that the test would ultimately be lawfully recommended by the commission and implemented”.
It was a high-profile win for the Freshfields Bruckhaus Deringer competition team, whose lead counsel Nick Green QC stepped in to replace Jonathan Sumption QC at late notice after a diary clash. It was the first time anyone has successfully challenged a market investigation remedy before the CAT using judicial review as set out in the Enterprise Act of 2002, and the first time anything like it had happened during a market enquiry. As Freshfields partner Deirdre Trapp told The Lawyer at the time: “There’s never been a decision like this under current legislation.”
The wider significance of the Tesco decision rather depends on whether you work at Freshfields or not. Some lawyers argue that all the CAT said was that the Competition Commission had not adequately set out its reasoning in weighing up costs and benefits, and it still has a wide discretion.
The Tesco judgment has not exactly stopped market investigations in its tracks, but is an implicit reprimand to the Competition Commission to sharpen up its act, and it is also indicative of how independent the CAT has become. This is particularly interesting considering the number of other market enquiries going through, such as payment protection insurance.
The composition of the workload will be shifting in the coming months from Competition Act to Communications Act cases, specifically, a review of Ofcom’s mobile call termination cases. But Barling himself will not be sitting.
Because of his former incarnation at the bar, when he was BT’s favoured counsel, he has had to absent himself.
If the CAT breaks more new ground there, it will have to do it without him.