Ofwat has published a Memorandum of Understanding (MoU) drawn up with the Competition and Markets Authority to establish an understanding on how closer collaboration between the CMA and Ofwat on competition enforcement will work in practice.
In April 2014 changes to the United Kingdom’s competition law system, introduced under the Enterprise and Regulatory Reform Act 2013 came into force which are designed to improve the effectiveness of competition law enforcement in the UK.
The 2013 Act introduced a number of changes to improve the working of concurrency and enable closer working between the CMA and sectoral regulators.
The CMA has competition law powers which apply across the whole economy. Sectoral regulators, including Ofwat, may exercise the competition law powers to enforce the prohibitions on anti-competitive agreements and on abuse of a dominant position. They can also make market investigation references concurrently with the CMA in those sectors for which they have responsibility.
The CMA and the sectoral regulators have already demonstrated their commitment to making the concurrency framework more effective through the establishment of the UK Competition Network (UKCN). The UKCN represents an enhanced forum for cooperation intended to enable closer working with the objective of more consistent and effective use of competition powers across all sectors.
In their statement of intent in December 2013, the members of the UKCN affirmed:
‘The mission of the UKCN will be to promote competition for the benefit of consumers and to prevent anti-competitive behaviour both through facilitating use of competition powers and development of pro-competitive regulatory frameworks, as appropriate.’
The MoU represents a further stage in the process of cooperation between the CMA and the regulators, setting out more practical detail on how the CMA and Ofwat will work together within the framework of competition law. It draws on the legislation which sets out the formal framework for how concurrency will operate and also sets out bilateral commitment to look for opportunities to work together.
The water and sewerage markets are already in the process of liberalisation, with the aim of fostering more competitive markets for the benefit of current and future customers.
As markets evolve, competition enforcement under the Competition Act 1998 and review of markets under the Enterprise Act 2002 will be increasingly important tools to enable the development of effective competition in the sector.
Click here to download the MoU