Interim judgment of the Tribunal on an appeal brought by Albion Water Limited (“Albion”) against a decision of the Director General of Water Services (“the Director”) that Dŵr Cymru Cyfyngedig (“Dŵr Cymru”) had not infringed the Chapter II prohibition in section 18 of the Competition Act 1998 in relation to the price offered by Dŵr Cymru to Albion for the “common carriage” of non-potable water across a part of Dŵr Cymru’s water transportation network known as the “Ashgrove System”.
The Tribunal noted that the appeal raised important issues regarding the application of the Chapter II prohibition and the interaction between the Competition Act 1998 and the Water Industry Act 1991 in relation to the supply of non-potable water to the very largest industrial customers in England and Wales.
The Tribunal noted that, partly as a result of the appellant initially being self-represented, certain highly relevant disclosure was sought and given only at a late stage in proceedings and that certain matters came into sharper focus at the hearing. Having considered the extensive material before it since the hearing the Tribunal considered that there were certain issues that required the matter to be restored for further directions before it reached a final judgment. Those issues were:
First, the central factual issue of whether, as maintained by the Director, the cost of the bulk distribution of non-potable water was the same as the cost of distribution of potable water;
Second, further argument was required as to whether the Tribunal should receive evidence as to the costs of non- potable water supply, including the costs of the Ashgrove System; and
Third, the workings and implications of an economic principle known as the Efficient Component Pricing Rule (“ECPR”) were a central issue which was not, in the Tribunal’s view, sufficiently ventilated at the hearing in order fairly to decide the matter under the Chapter II prohibition.
Furthermore, in relation to the appellant’s allegation of “margin squeeze” the Tribunal did not find itself in a position of being able to accept the Director’s submissions but equally did not feel able to accept the appellant’s submissions, at least until it had heard further argument. The margin squeeze issue was closely related to the ECPR issue and the Tribunal did not wish to decide those two issues separately.
The matter was restored for further directions and a further hearing scheduled to take place in May 2006.
