Everything Everywhere Ltd v Competition Commission & Ors

A merits appeal challenges the regulatory decision, not merely its reasoning. An appellant normally must show both that the original decision is materially flawed and that its proposed alternative should be adopted. Exceptionally, an appeal may succeed where the decision’s foundations are so undermined that it cannot stand, even though no substitute can be identified; the matter may then be remitted for a fresh decision. A specialist appellate body need not choose between alternatives if the statutory scheme does not require it and the evidence permits it to conclude that the regulator’s decision was not shown to be wrong. Reviewing courts should exercise marked caution in complex predictive economic judgments. Procedural fairness is satisfied where the affected party had a real opportunity to address a material point.

Ofcom imposed mobile termination charge controls using pure LRIC rather than LRIC plus. Everything Everywhere and Vodafone challenged that choice before the Competition Appeal Tribunal. The Tribunal referred the price-control issue to the Competition Commission, which concluded that Ofcom had not been shown to have erred. The Tribunal rejected judicial-review challenges to that determination in [2012] CAT 11.

Everything Everywhere appealed, arguing that the Commission had wrongly considered itself bound to choose between the two cost standards despite shortcomings in the evidence. It also alleged procedural unfairness and inconsistency. The central issues were whether the Commission could allow a merits appeal without identifying a substitute price-control measure, and whether its treatment of the evidence and a new efficiency point was legally reviewable.

Lord Justice Moses gave the judgment, with Lord Justices Patten and Longmore agreeing. The appeal was dismissed.

1. Under the merits appeal scheme in the Communications Act 2003, an appellant must establish that the decision itself was wrong on a statutory ground. It is insufficient merely to identify an error in reasoning. Where an alternative price-control measure is proposed, the appellant must also establish the merits of that alternative.
2. Exceptionally, an appellant may succeed by so undermining the foundations of the original decision that it cannot stand, without proving what decision should replace it. In that situation the Competition Commission or Tribunal may allow the appeal and remit the matter to Ofcom for a fresh decision, with directions to cure any evidential deficit. Such an outcome should be rare.
3. The statutory obligation to determine a referred price-control matter did not invariably require the Commission to choose between LRIC and LRIC plus. The broad definition of price-control matter in the Communications Act 2003, read with the Tribunal’s powers to dispose of the appeal and remit the decision, permitted a conclusion that Ofcom’s decision could not stand without substitution. The approach was consistent with the example in Vodafone Limited & Others v Office of Communications [2008] CAT 22.
4. The Commission had not concluded that the evidence was insufficient to support any choice. It used the survey evidence, made assumptions favourable to the appellants, and considered other evidence concerning ownership, subscriptions, usage and price changes. Its conclusion that allocative-efficiency evidence did not provide a clear answer was not a finding that the statutory choice could not be made. The Commission’s assessment of a complex predictive economic judgment was within the range of reasonable conclusions. The caution required when reviewing expert tribunals, reflected in Cooke v Secretary of State for Social Security [2002] 3 All ER 279, AH (Sudan) v Secretary of State for the Home Department [2008] 1 AC 678, R (Cart) v Upper Tribunal(SC(E)) [2012] 1 AC 663 and T-Mobile (UK) Limited v Office of Communications [2008] EWCA Civ 1371, was therefore important.
5. The alleged unfairness failed. The beneficial effect of losing some users had been raised in written submissions and in bilateral hearings. Everything Everywhere had opportunities to respond, including after receiving the relevant transcript. The inconsistency ground depended on the first ground and also failed.

• Court of Appeal (Civil Division) dismissed Everything Everywhere’s appeal from the Tribunal’s decision.
• Competition Appeal Tribunal rejected the judicial-review challenges to the Competition Commission’s determination and upheld the resulting position in [2012] CAT 11.
• Competition Commission considered the referred price-control issue on the merits and concluded that Ofcom had not been shown to have erred in selecting pure LRIC.
• Ofcom had imposed the relevant mobile termination charge controls using pure LRIC rather than LRIC plus.