Digital Economy Bill - Committee (4th Day)

Part of the debate – in the House of Lords at 4:15 pm on 8th February 2017.

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Photo of Lord Keen of Elie Lord Keen of Elie The Advocate-General for Scotland, Lords Spokesperson (Ministry of Justice) 4:15 pm, 8th February 2017

With respect to the noble Lord, Lord Lester, I have to say no, because here we are dealing with judicial review in the context of the EU framework directive, which requires that the merits of the case are duly taken into account in any appeal, therefore effectively introducing the issue of proportionality into that process. Therefore, even if there are cases which some might criticise as involving too narrow an approach to judicial review, that does not apply here. This is an incidence in which the issues of proportionality will arise in the context of judicial review. By taking this route, we are applying an appropriate standard to Ofcom’s decision-making.

As has been acknowledged by noble Lords, this is a fast-moving sector, and regulation needs to be able to keep pace with technological and market changes. This is rather difficult when appeals can drag out for a year after a regulatory decision has been made. As the UK’s expert regulator in the telecommunications sector, it is right that Ofcom itself should be given an appropriate margin of appreciation by the tribunals. That is why we have an expert regulator there—so that it can make an informed decision that should be given an appropriate margin of appreciation by the Competition Appeals Tribunal.

A judicial review basis for appeals is intended to be a flexible process that will ensure that those affected by Ofcom’s regulatory decisions can still challenge those decisions effectively within the framework of Article 4 of the EU framework directive. A number of Ofcom’s regulatory decisions are already appealable only on a judicial review basis. I made the point earlier that, with regard to individual regulators, you can find instances in which there is a merits-based appeal for some matters and a judicial review standard in respect of others.

By changing the standard of review to reduce over-lengthy and costly litigation, this clause will enable consumers to benefit sooner from the outcome of decisions made by Ofcom in pursuit of its statutory duty to further the interests of consumers. I emphasise that: one of Ofcom’s statutory duties is to further the interests of consumers. The clause will also remove a significant potential barrier to the participation of smaller communications providers in the appeals process, benefiting smaller, “challenger” communications providers. Again, they are inhibited by the prospect of massive merits-based appeals going before the Competition Appeal Tribunal.

The noble Lord, Lord Clement-Jones, has tabled two alternative approaches. Amendment 215 would replace the existing “on the merits” standard with a requirement for the tribunal to take,

“due account of the merits of the case”.

I acknowledge that the amendment essentially replicates the wording of Article 4 of the EU framework directive, albeit it is not identical to it. While this would in one view remove the gold-plating of the existing standard in a technical sense, the Government consider that it would not lead to any substantive change in approach. That might be why this proposal is being pushed so hard by the major operators in the telecoms sector. It would not, therefore, result in quicker appeals, timelier implementation of regulatory decisions or resultant consumer benefits.

Amendment 216 would alternatively replace the existing “on the merits” standard of appeal with a list of specified grounds. The tribunal would be able to uphold an appeal only where it was satisfied that Ofcom’s decision was wrong on one or more of these grounds. However, as noble Lords may be aware, the previous Government consulted on a similar approach in 2013 and we do not consider that this approach has merit. On balance, we consider that such an approach would risk significant satellite litigation if it were to be introduced—about the nature of the new standard of appeal, for example, which could lead to longer appeals and further regulatory delay. A standard of review based on judicial review principles, including the principles of proportionality in the context of the application of the European directive, which is well understood and used in many other sectors, will minimise this kind of uncertainty. In these circumstances, I invite the noble Lord to withdraw his amendment.

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