John Penrose’s report out today, a Fingleton perspective

Posted February 16, 2021
by Simon Oates

Simon Oates highlights the recommendations which will get the attention of regulated utilities and sector regulators

John Penrose’s independent report on how to bolster the UK’s approach to competition and consumer issues in future is out this morning.

Whilst light on detail, this thoughtful report signals the direction in which UK Government policy must now head.

He argues more needs to be done to: make markets work well for consumers, strengthen consumer protection, limit the burden of regulation, and streamline regulatory processes to minimise the regulatory red tape.

For regulated utilities and sector regulators alike, a number of the recommendations will grab attention and deserve their engagement in subsequent policy consultations, including:

  • appeals against sector regulators’ decisions should in future go to the CAT rather than CMA
  • a government taskforce should be established to complete an end-to-end review and redesign CMA and CAT procedures ... including whether appeals against sector regulators' decisions should remain “on the merits” or instead switch to “enhanced judicial review”
  • the primary legal duty of all sector regulators should be changed to “competition for the benefit of consumers first, regulation only as a last resort
  • a requirement on each economic regulator to publish and execute a multi-year plan to turn as much of their sector into a ‘normal’ pro-consumer, high-standards competitive market as possible
  • contracts to build and upgrade the network monopoly infrastructure in each regulated industry should be independently auctioned - rather than handing them to the incumbent monopoly-owners
  • each sector regulator should publish its workload figures annually and, in each year that economic regulation forms less than half of its activity, should write a public letter to the CMA’s Minister explaining whether their residual economic regulation duties should be transferred to the CMA.

Full text of John Penrose's report can be read [here] and an article in which I outlined the need for reform of appeals against sector regulators, and what this might mean for regulated businesses [here].