My Lords, this last amendment—which we will all be grateful about—deals with a separate issue of the relationship between the future CMA and the sector regulators. It is entirely different from the use of competition powers. It deals with the situation of appeals against decisions of the sector regulator to what is now the Competition Commission, which will be the CMA. That is a different function. In effect it is the Competition Commission becoming the CMA and acting as the Court of Appeal.
This role is only briefly recognised in the Bill. It is arguable that such arrangements should not be maintained in the new situation, since it is in effect one regulator second guessing another. Indeed, if the previous amendment stands, the potential conflict of interest in this area is actually quite acute. For the moment, that appeals system remains and is separate from the harmonious relationship that we wish to see on competition matters between the CMA and sector regulators.
These appeals are usually about price control decisions or the costs that are taken into account by regulators in setting the frameworks. Those decisions can be appealed by the industry as with the decisions of Ofwat in its price review, or of current decisions by Ofgem in terms of how much it has allowed the National Grid as regards its area investment programme and so forth.
I am not sure whether the statistics will show this but I understand that the number of appeals has increased. That is surprising because there has been a decrease in the direct and specific price control regimes. My experience suggests that of the recent decisions by the Northern Ireland utility regulator, almost all of them are in appeal now or were recently.
I also know that Ofwat’s five-yearly price review is always subject to threats of appeal, although there are relatively few actual appeals. As I say, I know that there now is an issue in relation to National Grid and Ofgem’s decisions, so there are a lot of these about. We have to be clear that the expertise is there in the CMA to deal with them.
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Because these cases are so different from market investigations and references, they need a special unit within the CMA. It is arguable that they may need a
special group of the board or panels of the CMA to deal with them, because they need different skills, but they certainly need a separate location of expertise. This amendment deals only with the staff element of setting up such a unit, which for conflict-of-interest purposes clearly should not be working simultaneously on a market reference for the same sector. It is a dimension of the CMA’s role that probably needs more recognition in the new regime and therefore in its eventual organisational structure. If this amendment were adopted, it would give the basis for doing that. I beg to move.