Judgment of the Tribunal in connection with applications for collective proceedings orders (“CPOs”) on an opt-out basis brought by Professor Carolyn Roberts against six water and sewerage undertakers (“WaSUs”). Each application concerns a separate set of proceedings against a distinct WaSU, but all are brought on a similar basis and the Tribunal directed that the applications be heard together.
The privatisation of water and sewerage services and the appointment of WaSUs was originally achieved by the Water Act 1989, which was then replaced by the Water Industry Act 1991 (“WIA”). The WaSUs are private companies which operate as statutory monopolies, each responsible for the supply of water and sewerage services in a distinct area. They are subject to regulation by the Water Services Regulation Authority (“Ofwat”), this includes regulation of the prices that the WaSUs may charge to household customers. They are also subject to targets regarding pollution incorporated by Ofwat into its price review determinations. The regulatory regime includes financial penalties for not meeting these targets, and also a combination of incentives and deterrence in that the WaSUs are allowed as part of the overall price control framework to recover greater revenue and therefore increase their prices, or conversely are required to recover less revenue and therefore reduce their prices, according to the number of relevant pollution incidents (“PIs”) which they report.
The claims alleged that the proposed defendants (“PDs”) significantly under-reported the number of relevant PIs and thereby were able to charge higher prices than they would have been permitted to charge if they had made accurate reports. Prof Roberts, as the proposed class representative (“PCR”), sought authorisation to bring these proceedings on behalf of a class comprising, in each case, all household customers of the relevant WaSU. The under-reporting of PIs, and the consequently higher prices charged to several million potential class members was alleged to constitute an abuse of a dominant position contrary to the Chapter II prohibition under s.18 of the Competition Act 1998 (“CA”).
Section 18(8) WIA provides, insofar as relevant:
“Where any act or omission—
(a) constitutes a contravention of a condition of an appointment under Chapter 1 of this Part …; or
(b) causes or contributes to a contravention of any such condition or requirement,
the only remedies for, or for causing or contributing to, that contravention (apart from those available by virtue of this section) shall be those for which express provision is made by or under any enactment and those that are available in respect of that act or omission otherwise than by virtue of its constituting, or causing or contributing to, such a contravention.” [emphasis added].
Section 18(8) WIA has recently received authoritative interpretation by the Supreme Court in United Utilities Water Ltd v Manchester Ship Canal Co Ltd (No 2) [2024] UKSC 22, [2024] 3 WLR 356. The Court considered the final words of s.18(8) and explained that the only ouster is of causes of action of which a contravention of a condition of an undertaker's appointment or licence, or of a statutory or other requirement enforceable under that section, forms an "essential ingredient".
The Tribunal held that the alleged failure of the PDs to supply accurate information for the statutory regime of price control under the WIA was an essential ingredient of the PCR’s claim for breach of statutory duty under the CA. Accordingly, the Tribunal concluded that the claims for abuse of dominance in breach of the Chapter II prohibition were excluded by s.18(8) WIA.
The position would have been different if the prices charged by the PDs were in themselves said to constitute an abuse in the form of excessive and unfair pricing, by reference to the jurisprudence on unfair pricing: see Case 27/76 United Brands v Commission, EU:C:19787:22, [1978] ECR 207. But that was not the case advanced here: there was no allegation that the prices charged were excessive on an objective test independent of the regulatory regime.
The Tribunal explained that if the claims for abuse of dominance were not so excluded, the Tribunal would have granted CPOs in each set of proceedings.
