Ofcom has today issued a Statement of Objections to Royal Mail alleging that it abused its dominant position in the market in which it supplies letter delivery services to competing postal operators.

As the former monopoly supplier of letter post services in the UK, Royal Mail is obliged by regulatory conditions to offer rival postal operators access to its letter delivery network consisting of local delivery offices and postmen/women covering every address in the UK.  There are a number of rival operators that compete with Royal Mail by supplying bulk mail services to businesses sending large volumes of mail.  Such operators compete with Royal Mail in the ‘upstream’ market by collecting mail from their customers, sorting that mail, and transporting it to the localities where the end-recipients’ addresses are located.  However, they then rely on Royal Mail’s ‘downstream access’ service to deliver the mail to individual addresses.  Such competing operators hand over the mail to Royal Mail’s local delivery offices for delivery by Royal Mail postmen.

Ofcom’s investigation arises from a complaint made by rival operator Whistl (formerly known as TNT Post UK), which had planned to compete with Royal Mail in the downstream market and had already begun delivering to postcode areas in parts of London and other areas of the country, using its own uniformed posties.  Whistl remained reliant on Royal Mail’s downstream access for being able to deliver mail to other postcode areas.

In November 2013 and January 2014 Royal Mail announced certain changes to its prices and other terms and conditions on which it would offer its downstream access service.  Whistl considered that these changes were anti-competitive, being directed at responding to the threat of competition in letter delivery by making it unviable for Whistl, or any other postal operator in the upstream market, to compete with Royal Mail’s delivery network and offer customers ‘end-to-end’ letter delivery services.

The Statement of Objections sets out Ofcom’s provisional view that Royal Mail breached competition law by engaging in conduct that amounted to unlawful discrimination against postal operators competing with Royal Mail in letter delivery.  Specifically, the Statement of Objections alleges that the changes to Royal Mail’s wholesale prices for bulk mail delivery services contained a differential in pricing which meant that, in practice, higher access prices would be charged to access customers (i.e. rival operators) that competed with Royal Mail in delivery than to those access customers that did not.

Ofcom’s press release announcing the issue of the Statement of Objections (which has not yet been published) alleges that these higher access prices “would act as a strong disincentive against entry into the delivery market, further increasing barriers to expansion for postal operators seeking to compete with Royal Mail in this market, and leading to a potential distortion of competition against the interests of consumers”.

The Statement of Objections states the facts on which Ofcom relies; the objections it has raised; the actions it proposes to take; and its reasons for proposing to take those actions.  Royal Mail can now make representations to Ofcom, which Ofcom will consider before taking a final decision.

Monckton barrister Alan Bates is advising Whistl.

The High Court has today dismissed a challenge to energy regulator Ofgem’s decision to approve changes to the way electricity generators pay for access to the onshore electricity transmission system for Great Britain (the ‘national grid’).

The owners of the transmission system incur costs in investing in the transmission system in response to the demands placed on it. Those owners are entitled to recover their investment from transmission system users, who include power station operators and other generators. Generators pay charges, known as Transmission Network Use of System (TNUoS) charges in respect of their access to the system for transporting electricity.

Under the changes to the TNUoS charging methodology which Ofgem approved, a certain element of the TNUoS charges will be paid only by “conventional generators”, i.e. gas fired, nuclear and other generating plants that can be relied on to generate at times of peak electricity demand. “Intermittent generators”, such as wind and solar farms, are dependent on weather conditions for being able to generate. They would not have to pay the relevant element of the TNUoS charges. Ofgem considered that this difference in treatment between conventional, as compared with intermittent, generators reflected differences between those two classes of generators in terms of how generators’ requirements for transmission system access drive investments by the transmission owners in upgrading system capacity at particular locations.

RWE NPower challenged Ofgem’s decision, arguing that it was unjustifiably discriminatory and therefore contrary to the EU Electricity Directive (Directive 2003/54/EC). RWE also argued that Ofgem had misunderstood the concept of “cost-reflectivity” in the Directive. Further, RWE alleged that  the decision would give rise to unlawful State aid, including by undermining the factual basis on which the European Commission gave State aid approval for the ‘Renewables Obligation’ and other UK schemes for encouraging low carbon generation.

The judge (Mr Justice Lewis) has dismissed the claim in full.

Ofgem was represented by Monckton barristers Daniel Beard QC, Alan Bates and Daisy Mackersie.

In court today, Birss J. handed down an important judgment on the interplay between competition law and the licensing of essential patents.

This is part of a significant patent infringement case where Unwired Planet, a “patent assertion entity” that has acquired essential patents used in smart phones and network equipment from Ericsson, has sued Samsung, Google and Huawei for infringing the essential patents.  Ericsson has been joined to the action. Samsung and Huawei have raised various competition law defences, under Articles 101 and 102 TFEU.

Birss J. struck out one of Samsung’s Article 101 TFEU defences, but upheld two others.

The defence that he struck out related to a complaint about the effectiveness of the transfer from Ericsson of any obligations to license essential patents on Fair Reasonable And Non Discriminatory (FRAND) terms.  Samsung argued, among other things, that the content of Ericsson’s original “non-discrimination” obligation would be circumvented by spinning off the patents to the patent assertion entity.  Samsung also argued that the transfer of the patents failed to ensure that third parties could fully enforce FRAND obligations against the patent assertion entity.

The High Court dismissed Ericsson’s strike out and summary judgment application against Samsung’s other competition law arguments, which will now proceed to trial.   One of these was that the terms of the transfer of patents involved anti-competitive influence by Ericsson over the patent assertion entity to charge high prices.

The other, related, argument was particularly important, and has been discussed in the economic literature and raised in US antitrust enforcement circles.  It is that Ericsson had strategically sold part of its portfolio of standard essential patents to the patent assertion entity, while keeping a close ongoing involvement in the monetization of those patents.  Samsung’s argument is that Ericsson’s transfer of the patents to Unwired Planet is an anti-competitive “privateering” arrangement and is void under Article 101 TFEU.

Birss J. commented that this is an important and developing area of the law which also raised fact sensitive issues needing to be addressed at trial.

He awarded Samsung a proportion of its costs, to reflect the fact that it had had the greater measure of success.  He awarded costs too in favour of Huawei, which joined Samsung in arguing about the anti-competitive terms of the deal.

He also dismissed an application by Ericsson against Samsung to try to stay certain claims on the footing that these should be arbitrated in New York.

 

Samsung is represented by Jon Turner QC, Meredith Pickford QC and James Bourke.

 

Please click here for the full Judgment

 

The Court of Appeal today dismissed an appeal brought by Mrs Pat Long against the judgment of the Divisional Court ([2014] EWHC 2391 (Admin)) refusing her claim seeking a fresh investigation into the death of her son Corporal Paul Long, one of six British soldiers of the Royal Military Police who were murdered at a police station in Iraq on 24 June 2003. The claim was brought on the basis that the United Kingdom had not discharged its investigative obligation under Article 2 ECHR to investigate the soldiers’ deaths. The allegation said to require further investigation was of a lack of care or competence in the Army chain of command by failing to ensure that a standing order on communications equipment was implemented by the Royal Military Police.

Unlike the Divisional Court, the Court of Appeal found that the facts surrounding the soldiers’ deaths were such as to engage the state’s substantive obligations under Article 2 and therefore a duty under Article 2 to hold an investigation. The Court found that the routine failure of the Royal Military Police to comply with the standing order was a failure of system or control and not an isolated failure of an individual to comply, and that requiring an investigation into why a practice developed whereby the order was routinely ignored would not be disproportionate or unreasonable.

The Court of Appeal agreed, however, with the Divisional Court’s conclusion that the investigations that had already taken place, including an Army Board of Inquiry and the Coroner’s inquest, had revealed what went wrong and what lessons were to be learnt and that Article 2 did not therefore require any further investigation into the question of how the communications order came to be disregarded. The Court of Appeal also agreed with the Divisional Court’s view that, even if the Article 2 investigative duty had not been fully discharged: (i) it would be unrealistic to suppose that further significant or useful information could be obtained by a further investigation so many years after the event; and (ii) there was no reasonable prospect that there could be further lessons to be learnt that were of current or future relevance at this distance in time.

The Judgment is available here The Queen on the application of Long v Secretary of State for Defence.

Daniel Beard QC, Gerry Facenna and Brendan McGurk acted for the Secretary of State for Defence.

The Court of Appeal today dismissed an appeal brought by Mrs Pat Long against the judgment of the Divisional Court ([2014] EWHC 2391 (Admin)) refusing her claim seeking a fresh investigation into the death of her son Corporal Paul Long, one of six British soldiers of the Royal Military Police who were murdered at a police station in Iraq on 24 June 2003. The claim was brought on the basis that the United Kingdom had not discharged its investigative obligation under Article 2 ECHR to investigate the soldiers’ deaths. The allegation said to require further investigation was of a lack of care or competence in the Army chain of command by failing to ensure that a standing order on communications equipment was implemented by the Royal Military Police.

Unlike the Divisional Court, the Court of Appeal found that the facts surrounding the soldiers’ deaths were such as to engage the state’s substantive obligations under Article 2 and therefore a duty under Article 2 to hold an investigation. The Court found that the routine failure of the Royal Military Police to comply with the standing order was a failure of system or control and not an isolated failure of an individual to comply, and that requiring an investigation into why a practice developed whereby the order was routinely ignored would not be disproportionate or unreasonable.

The Court of Appeal agreed, however, with the Divisional Court’s conclusion that the investigations that had already taken place, including an Army Board of Inquiry and the Coroner’s inquest, had revealed what went wrong and what lessons were to be learnt and that Article 2 did not therefore require any further investigation into the question of how the communications order came to be disregarded. The Court of Appeal also agreed with the Divisional Court’s view that, even if the Article 2 investigative duty had not been fully discharged: (i) it would be unrealistic to suppose that further significant or useful information could be obtained by a further investigation so many years after the event; and (ii) there was no reasonable prospect that there could be further lessons to be learnt that were of current or future relevance at this distance in time.

The Judgment is available here The Queen on the application of Long v Secretary of State for Defence.

Daniel Beard QC, Gerry Facenna and Brendan McGurk acted for the Secretary of State for Defence.

In a decision today (17 July 2015) the Divisional Court (Bean LJ and Collins J) has held that the Data Retention and Investigatory Powers Act 2014 (‘DRIPA’) is inconsistent with EU Law. The claimants, Peter Brice and Geoffrey Lewis, were represented by a legal team including Azeem Suterwalla, instructed by Stuart Luke of Bhatia Best Solicitors Ltd. Their claims were heard together with those of David Davis and Tom Watson MPs, represented by Liberty. The Secretary of State for the Home Department was represented by a team including Daniel Beard QC.

The claimants brought their claims as they were concerned with the width of the powers to retain and gain access to their data on a number of grounds, including confidentiality of communications with solicitors and, in respect of Mr Davis and Mr Watson, concerns about the confidentiality of communications to and from constituents.

The claimants challenged the validity of section 1 of DRIPA and the Regulations made under it as being contrary to EU law, as set down in the decision of the CJEU in Digital Rights Ireland v Minister for Communications, Marine and Natural Resources and others – ‘DRI’ ([2015] QB 127). The provisions allow for the wide-scale retention of communications data (data providing information as to who was communicating; when; from where and with whom – but not including the content of a communication). S.1 DRIPA also incorporates provisions relating to access of that data as set out in s. 22 of the Regulation of Investigation Powers Act (‘RIPA’).

DRIPA had been passed in 2014, on an expedited basis, following the decision of the CJEU in DRI. The CJEU had held that Directive 2006/24/EC – on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks – was invalid. Directive 2006/24/EC had sought to harmonise the communication data retention arrangements across the EU. In DRI the CJEU found that the Directive was contrary to Articles 7 and 8 of the Charter of Fundamental Freedoms.

Before the Divisional Court the claimants argued that the provisions of DRIPA and the secondary legislation were directly at odds with the reasoning and decision in DRI. The Secretary of State argued that the decision in DRI was not to be interpreted as setting down mandatory requirements for the retention and access regime for data in member states.

The Divisional Court rejected the Secretary of State’s arguments and also that the reasoning and effect of DRI were unclear such that a preliminary reference should be sought. The Judges held that the ratio of DRI was that legislation establishing a general retention regime for communications data infringed Articles 7 and 8 of the EU Charter unless it was accompanied by an access regime (laid down at national level) which provided adequate safeguards for those rights. As such an access regime, consistent with the reasoning in DRI, had not been put in place by DRIPA, section 1 was contrary to EU law.

The Divisional Court has granted the Secretary of State permission to appeal to the Court of Appeal.

The Judgment is available here David Davis and others -v- Secretary of State for the Home Department.

Katie Drummond, Pupil barrister, Monckton/Government Legal Department

On 16 July 2015 the Grand Chamber of the Court of Justice handed down its judgment in a request for a preliminary ruling from the Irish High Court on the Citizenship Directive (2004/38). The case concerns the circumstances in which a non-EU spouse of an EU citizen retains a right of residence in a host member state when the EU citizen dies, departs or divorces him.

The three appellants, non-EU citizens, had married EU citizens who at the time were exercising their treaty rights by living and working in Ireland. In each case, the marriage had broken down, the EU citizen had left Ireland, and a divorce was subsequently obtained.

The Irish government, supported by the UK government, argued that the appellants’ right of residence ceased when the EU citizen left Ireland, having regard to the provisions in Article 12 of the Directive on death and departure. The appellants argued that they should in fact be considered under Article 13, which concerns retention of residence after divorce, and that under that provision they retained a right to reside.

The CJEU agreed with the interpretation put forward by the Irish and UK governments that the departure of the EU citizens in the present cases had brought an end to the non-EU spouses’ right of residence, and that it could not be revived by subsequent divorce proceedings. The retained right of residence under Article 13 only applies if the divorce proceedings are commenced while both spouses are present in the host member state.

The CJEU’s judgment clarifies the position of a third country spouse in a host member state where his or her marriage to an EU citizen breaks down and the latter leaves the host state prior to divorce. In doing so, it reaffirms the important principle that the EU law rights of third country nationals are not autonomous, but are derived from the exercise of free movement rights by an EU citizen.

The full judgment is available here: Singh and Others v Minister for Justice and Equality.

Gerry Facenna and Ben Lask represented the UK Government.

On 14 July 2015, Coulson J handed down judgment in a challenge to a local authority’s scoring of the qualitative aspects of the first and second placed bids in a tender process for asbestos removal services conducted under the Public Contracts Regulations 2006. The claim involved detailed challenges to the scores that the contracting authority had awarded to each of the first and second placed bids in respect of each of the 12 published quality sub-criteria in the procurement process – a challenge to 24 scores in total. The scores were challenged on the grounds of manifest error of assessment as well as breach of the general principles of transparency and equal treatment.

Coulson J held that it was necessary first to analyse the Claimant’s scoring complaints in order to ascertain whether, regardless of its formulation, the claim was in substance one of (i) breach of transparency/equal treatment or (ii) manifest error. He noted that the contracting authority does not have any discretion in relation to (i), but enjoys a wide margin of appreciation in relation to (ii). His Lordship reaffirmed his indication in the BY Development v Covent Garden Market Authority [2012] EWHC 2546 (TCC) that the “manifest error” test derived from EU law is equivalent to the English law test of Wednesbury unreasonableness.

Coulson J found that – subject to a couple of substantive equal treatment points – the majority of the Claimant’s complaints in this case were, in substance, claims of manifest error. He went on to undertake a detailed review of each of the 24 scoring complaints and concluded that the equal treatment claims as well as a number of the manifest error claims were well founded. He considered that adjustments were required to 8 out of 24 scores, which would have the effect of moving the second placed bid into first place.

The full judgment is available here Woods Building Services Ltd v Miton Keynes Council.

Ligia Osepciu acted for the Defendant, Milton Keynes Council.

Ryanair has suffered two legal defeats in its long running dispute with the Competition and Markets Authority over its minority stake in Aer Lingus.

Nearly two years ago the CMA published a report finding that Ryanair’s near 30% stake in its rival lead to a substantial lessening of competition, and that Ryanair should be ordered to reduce its holding to 5%. That decision was challenged, unsuccessfully, in the Competition Appeal Tribunal and Court of Appeal.Yesterday the Supreme Court refused Ryanair permission for a further appeal.

Meanwhile Ryanair had argued that IAG’s bid for Aer Lingus was a “material change of circumstances” requiring that the remedy be altered or abandoned. The CMA took a separate decision on this, finding no such change, which was the subject of a further challenge before the CAT earlier this month. Today the CAT rejected Ryanair’s challenge, finding that the CMA’s decision was not irrational, nor was it necessary for the CMA to carry out a new proportionality assessment in the absence of any material change in circumstances. The judgment is available here Ryanair Holdings plc v Competition and Markets Authority July 2015.

Also today came the news that the European Commission had cleared IAG’s bid, which Ryanair has said it will accept. Followers of this long running saga can look forward to an interesting summer.

The CMA was represented by Daniel Beard QC, Rob Williams and Alison Berridge.

 

Chambers is delighted to announce that the Competition and Markets Authority (CMA) has appointed Rob Williams as Standing Counsel. The appointment follows an open competition (the first since the CMA became the primary competition and consumer authority in the UK) and has been made with the approval of the Attorney General.

Rob has been appointed to a panel of three barristers who will work closely with the CMA to provide advice and representation across its case work. The appointment term is three years with an option to extend for a further three.

Rob follows in a long line of distinguished competition lawyers at Monckton Chambers who have performed the role of standing counsel to the UK’s Competition authority including Jon Turner QC, Daniel Beard QC, and before their appointment to the bench, Mrs Justice Rose and Lord Justice Richards.

Please click here to see the CMA press release.