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	United Kingdom Competition Appeals Tribunal
You are here: BAILII >> Databases >> United Kingdom Competition Appeals Tribunal >> Albion Water Ltd v Water Services Regulation Authority [2006] CAT 33 (20 November 2006) URL: http://www.bailii.org/uk/cases/CAT/2006/33.html Cite as: [2006] CAT 33

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Neutral Citation: [2006] CAT 33

IN THE COMPETITION APPEAL TRIBUNAL

Case No. 1034/2/4/04 (IR)

Victoria House,

Bloomsbury Place,

London WC1A 2EB

20 November 2006

Before:
SIR CHRISTOPHER BELLAMY
(The President)
THE HONOURABLE ANTONY LEWIS
PROFESSOR JOHN PICKERING Sitting as a Tribunal in England and Wales _____________________
BETWEEN:

ALBION WATER LIMITED Appellant

-v- (formerly DIRECTOR GENERAL OF WATER SERVICES) Respondent
Supported by
DWR CYMRU CYFYNGEDIG
and UNITED UTILITIES WATER PLC Interveners
_____________________
RULING (VARIATION OF INTERIM RELIEF)
_____________________
APPEARANCES

Mr. Rhodri Thompson QC and Mr. John O'Flaherty appeared on behalf of the Appellant

Mr. Rupert Anderson QC (instructed by the Head of Legal Services, Water Services Regulation Authority) appeared on behalf of the Respondent.

Mr. Christopher Vajda QC and Mr. Meredith Pickford (instructed by Wilmer Cutler Pickering Hale and Dorr LLP) appeared on behalf of Dwr Cymru Cyfyngedig.

Mr. Simon Gardiner (of United Utilities) appeared on behalf of United Utilities PLC.


 


THE PRESIDENT: This very long running case is now close to its final conclusion as far as the Tribunal is concerned. The Tribunal envisages giving Judgment on the outstanding issues in mid-December at the latest. The only issue on which the Tribunal's ruling is requested today is in relation to a variation sought by Albion of an existing order made in this case requiring, on an interim basis, Dwr Cymru to reduce its price to Albion under the second bulk supply agreement between the parties – a price known as the "bulk supply price".

The history of the matter is that in parallel with the main proceedings, which are taking place in case 1046 there are other proceedings whose roots are to be found essentially in case 1031 and 1034 in which Albion, among other things, has challenged that bulk supply price as an abuse of dominance (e.g. para.4 Notice of Appeal in case 1031 dated 1^st April 2004)

On 11^th May 2004 Albion made an application for interim measures to the then Director seeking a reduction in the bulk supply price by way of an interim order. That request was refused by the Director on 26^th May 2004, and Albion then appealed to the Tribunal against that refusal and/or sought interim measures from the Tribunal in proceedings that became case 1034R.

Under s.47(1)(e) of the 1998 Act, the Tribunal has jurisdiction inter alia to hear appeals against refusals for interim measures.

On 2^nd June 2004, and still in cases 1031 and/or 1034 IR, the Tribunal by consent made an order reducing the bulk supply price by 2.05 pence per cubic metre. Just under a year later, on 19^th May 2005, we varied that order essentially to deal with a mismatch as regards timing that had arisen as a result of the effect of certain price changes that took place between the parties. The Tribunal's Judgment is at [2005] CAT 19, and the essential reasons for that variation are set out in para.10: "However, looking at the balance that the Tribunal must strike, we have come to the conclusion we should not run the risk of insolvency overtaking Albion pending the delivery of the Judgment in this case. We also bear in mind that this particular Judgment involves matters of public interest that in fact go beyond the immediate parties here involved and affect the water industry generally.

What is involved in Albion's application here is a relatively short time period … and from Dwr Cymru's point of view a relatively small sum of money, although a sum of money relatively speaking important to Albion. The bargaining power between the Appellant and Dwr Cymru, if we can put it like that, is not equal."

That was essentially the position as at May 2005. What has then happened with effect from 1^st November 2006, as we understand it, is that Shotton Paper – the ultimate customer in this case – has withdrawn from Albion some support that Shotton Paper was according Albion in the sum of 1.5p per cubic metre.

Dr. Bryan (on behalf of Albion) has filed a witness statement on 15^th November 2006, para. 54 of which states:

"Failure to agree adequate interim or final measures is likely to require Albion Water to cease trading within two months."

Various arguments have been put to us about Albion's situation. It has been argued that Albion's financial position is not as bad as it is painted, and it has also been suggested that it would be quite sufficient for Albion to enter into an agreement with Dwr Cymru, a draft of which has been circulated, which would envisage that in an interim period the price of bulk supplies would indeed be reduced by 1.5p per cubic metre, but subject to an agreement that both parties would submit to the Authority the question of the determination of a new bulk supply price as a separate procedure under the Water Industry Act rather than under the 1998 Act. Various complications about that suggestion have been drawn to our attention in argument but in our view it is not necessary for the purposes of this Judgment to go into detail.

In our view, the Tribunal's position is essentially the same as it was in May 2005, bearing in mind in particular that we are now only a short time from the Tribunal's last Judgment in this case. We do not think we should run any risk of insolvency overtaking Albion. There are still outstanding matters to resolve, there is still the question of permission to appeal, there is still the possibility of this matter going further. We bear in mind that the Judgments that we have had to consider do involve matters of public interest, that what is here involved is a relatively short time period, and from Dwr Cymru's point of view, a relatively small sum of money, although a sum of money relatively speaking still important to Albion.

In those circumstances in the period from today to the delivery of the Tribunal's further Judgment in this case we have come to the conclusion that the balance is in favour of granting Albion the interim relief that it seeks. The figure of 2.05p per cubic metre in the existing order should therefore be varied to a figure of 3.55 – if our arithmetic is correct – and we think it right that in the circumstances of this case that should take effect from the date of the change of Shotton's support for Albion, that is to say from 1^st November.

As we have said, that variation runs until the Tribunal next has occasion to make an order in this case, or to consider the matter further which, as presently anticipated, will be in about three weeks' time, so that is effectively an order to deal with the next three weeks, and we shall revisit the question again at that stage. In that and other connections, the whole question of the interim or final orders that may be necessary in this case will require further consideration but that seems a fair order for the Tribunal to make ad interim at this stage.

MR. VAJDA: I do not know if I am entitled to engage the slip rule, as it were. I think, Mr. President, you said it should run from the date of 1^st November.

THE PRESIDENT: That is what I said – have I slipped?

MR. VAJDA: Well the letter from Shotton is actually dated 10^th November, it is with immediate effect.

THE PRESIDENT: I see, thank you very much. From the 10^th.

MR. VAJDA: From the 10^th, yes.

THE PRESIDENT: Thank you very much for that, Mr. Vajda.