Cityhook Ltd Cityhook (Cornwall) Ltd, R (on the application of) v Office of Fair Trading (Rev 1)

The OFT may close an investigation into suspected competition infringements on administrative-priority grounds, including after investigative steps have begun and before a Statement of Objections is issued. Consumer interests, the type of alleged infringement, evidential strength and resource allocation may properly inform that discretion. The decision remains reviewable on ordinary public-law grounds, but the court will intervene in resource-allocation decisions only where the decision is irrational or otherwise unlawful. Where concurrent regulators have previously agreed which body should investigate, a decision by the active regulator to stop requires engagement with the other regulator and an invitation to consider taking over the case.

Cityhook challenged the OFT’s decisions to close investigations into an alleged collective boycott of its submarine-cable landing technology and alleged collective setting of wayleave fees. The investigations had begun under Competition Act 1998, following agreement that the OFT was the competent regulator despite OFTEL/OFCOM’s concurrent powers.

The CAT dismissed Cityhook’s merits appeal for lack of jurisdiction, holding that closure of the investigations was not an appealable infringement or non-infringement decision: [2007] CAT 18. Cityhook then pursued judicial review, alleging unlawful prioritisation, inadequate reasoning and failure to consider transfer to OFCOM.

1. Administrative priority. The OFT’s discretion under section 25 of the Competition Act 1998 did not become narrower merely because an investigation had commenced. Administrative priority could remain relevant at any stage before a Statement of Objections. The OFT’s discretion had to be exercised rationally, by reference to relevant factors and the statutory purpose. The court rejected the argument that only intrinsic features of the individual case could justify discontinuance.
2. Prioritisation criteria. It was lawful in principle for the OFT to consider consumer benefit or detriment, the type of alleged infringement, evidential strength, policy considerations and the comparative deployment of limited resources. The criteria were guidance, not a substitute for the statutory discretion. Environmental benefits might be relevant in an appropriate case, but they had not been sufficiently raised here to affect the decision.
3. Object and effect analysis. The internal disagreement about whether the alleged collective boycott was an object-based or effect-based infringement was genuine. Although the claimant’s analysis had considerable force, it was reasonably open to the decision-maker to regard the legal position as uncertain and to conclude that further effects analysis was required. That conclusion was not Wednesbury unreasonable.
4. Reasoning defects. The OFT’s response to Cityhook’s economic argument, particularly its reliance on the absence of concrete third-party evidence, was unsatisfactory. Its discussion of further investigation of possible defences also added little. Those defects did not justify quashing the closure decisions because the unchallenged and sufficient underlying reason was that other cases had become higher priorities for the OFT’s limited resources.
5. Concurrency. Under the Competition Act 1998 (Concurrency) Regulations 2004, where one concurrent regulator decided to stop pursuing a case previously allocated to it, good and fair administration required an active process of engagement with the other regulator. Given the advanced investigations and OFCOM’s concurrent jurisdiction, the OFT was obliged to invite OFCOM to consider taking over both cases. The court did not quash the closure decisions, but directed that proper consideration be given to possible transfer to OFCOM.

1. Competition Appeal Tribunal dismissed Cityhook’s appeal for lack of jurisdiction, holding that closure of the investigations was not an appealable infringement or non-infringement decision: [2007] CAT 18.
2. High Court (Administrative Court) upheld the OFT’s decisions to close the investigations on administrative-priority grounds, but required the OFT to engage with OFCOM about possible transfer of the cases.