Albion Water v Ofwat (Shotton site) [2006] CAT 23
Judgment (322 pages, PDF) of the Competition Appeal Tribunal in the Albion Water v Ofwat (Shotton Paper site) case.
Some extracts (20 pages, PDF) published on 6 October 2006 and an abridged version (209 pages, PDF) are also available.
The Tribunal quashed Ofwat's non-infringement decision, finding that:
- Ofwat had wrongly accepted Welsh Water's evidence on the costs of the distribution system (including the potable/non-potable issue).
- The first access price offered by Welsh Water to Albion was excessive in relation to the economic value of the services.
- Ofwat's cross-check using the efficient component pricing rule (ECPR) was unsafe because the retail price was not cost based, was itself excessive, and because the application of ECPR would be exclusionary. Ofwat's argument in the Tribunal was also inconsistent with the reasoning in the decision.
- Welsh Water had engaged in a margin squeeze. Ofwat's non-infringement decision in this regard was wrong or insufficiently reasoned.
- Ofwat's reliance on the charging principles introduced by the Water Act 2003 was unsafe because it did not take account of the possibility that the retail price was itself excessive, and because Ofwat's approach to avoidable (ARROW) costs was open to serious question.
Ofwat's decision is also criticised for questioning the legitimacy of Albion Water's business; the Tribunal thought that this "entirely mischaracterised the facts of this case" in the light of Albion's water efficiency and retail services.
The Tribunal will now consider remedies, including the possibility of making a finding that Welsh Water was in a dominant position (something that Ofwat had not determined in its decision), and that it had abused that position in its dealings with Albion Water.
For further information or advice please contact Franck Latrémolière.
Filed under Article 82, CAT, Ofwat, Water.
