Only fully fledged market participants to be able to take code appeals to the CMA

DEFRA has laid the regulations in Parliament that will govern appeals to the Competition and Markets Authority against a decision by Ofwat to revise – or to reject a proposed revision to – the codes that govern the business retail market.

Following a consultation that ran through November and December last year, the Department has ruled that only appointed undertakers and Water Supply and Sewerage Licence holders have the right to appeal – not any other party or those with applications in train. It reasoned that wider interests would be able to raise issues via the Codes Panel/codes modification process (which takes place before the Panel puts modifications to Ofwat).

“For the formal code appeals mechanism, we therefore consider that limiting the class of appellant and interveners to materially affected market participants is the most proportionate approach. It will mean that the CMA does not have to incur time or monetary costs to assess appeals that may be vexatious, by ensuring it is not open to parties with no meaningful stake in the decision.”

More broadly DEFRA confirmed the fast track appeals process it had consulted on would go ahead, having received widespread support from the 13 respondents. It also confirmed:

  • it would designate the relevant codes – the Market Arrangements Code and Wholesale Retail Code – as codes under the regulations;

  • Ofwat would not have the power to stop an appeal; and

  • it would review the regulations in light of market evolution.

The regulations are due to come into force on market opening day. In the meantime, the CMA will consult on appeal rules and accompanying guidance on how it will conduct appeal cases.