United Kingdom Competition Appeals Tribunal

You are here: BAILII >> Databases >> United Kingdom Competition Appeals Tribunal >> Albion Water Ltd & Anor v Water Services Regulation Authority [2009] CAT 12 (9 April 2009)
URL: http://www.bailii.org/uk/cases/CAT/2009/12.html
Cite as: [2009] Comp AR 223, [2009] CAT 12

[New search] [Printable RTF version] [Help]

Neutral citation [2009] CAT 12

IN THE COMPETITION APPEAL TRIBUNAL

Case Nos: 1034/2/4/04 (IR)

1046/2/4/04

Victoria House

Bloomsbury Place

London WC1A 2EB

9 April 2009

Before:

LORD CARLILE OF BERRIEW Q.C.

(Chairman)

THE HONOURABLE ANTONY LEWIS

PROFESSOR JOHN PICKERING

Sitting as a Tribunal in England and Wales

BETWEEN:

ALBION WATER LIMITED

ALBION WATER GROUP LIMITED

Appellants

-v-

WATER SERVICES REGULATION AUTHORITY

Respondent

supported by

DWR CYMRU CYFYNGEDIG

UNITED UTILITIES WATER PLC

Interveners

Heard at Victoria House on 13 February 2009

_____________________________________________________________________

JUDGMENT (Remedy and costs)

_____________________________________________________________________

APPEARANCES

Mr. Rhodri Thompson Q.C. and Mr. John O'Flaherty (instructed by Palmers Solicitors) appeared on behalf of the Appellants.

Miss Valentina Sloane (instructed by Pinsent Masons LLP) appeared on behalf of the Respondent.

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

Mr. Fergus Randolph (instructed by the Group Legal Manager, United Utilities) appeared on behalf of United Utilities Water plc.

I. INTRODUCTION

There have been three principal judgments in this litigation. Respectively, they are the judgments of 6 October 2006 [2006] CAT 23 ("the main judgment"), 18 December 2006 [2006] CAT 36 ("the further judgment"), and 7 November 2008 [2008] CAT 31 ("the unfair pricing judgment"). The Tribunal has found that Dwr Cymru abused its dominant position by offering an access price for common carriage of non-potable water via the Ashgrove system, referred to in these proceedings as the "First Access Price", which imposed a margin squeeze and was excessive and unfair in itself. In this Judgment we use the same terms and abbreviations used in the Tribunal's earlier judgments, with which it should be read for the background and other details of Albion's appeal. Questions now arise as to the appropriate remedy and costs.

Following the finding of unfair pricing, the parties agreed an access price for common carriage services of 14.4p/m³in 2000/2001 prices (adjusted for inflation, and subject to certain conditions). We are disappointed that a completely agreed settlement of all outstanding matters was not reached. This would have been more satisfactory for the customers of the water industry. Settlement absent, on 13 February 2009 the Tribunal held an oral hearing to consider the issues raised by the applications of Albion and Dwr Cymru, both dated 24 November 2008, for final relief.

The Tribunal has considered all the written material submitted by the parties, as well as the oral argument, in arriving at the conclusions set out in this judgment. We are grateful to all concerned for the assistance they have given.

The Tribunal has had regard to the very recent remarks of Mummery LJ in the judgment in Office of Communications & T-Mobile (UK) Ltd v Floe Telecom Ltd [2009] EWCA Civ 47 at paragraphs [20]-[21]:

"… There are sound reasons why courts and tribunals at all levels generally confine themselves to deciding what is necessary for the adjudication of the actual disputes between the parties. Deciding no more than is necessary may be described as an unimaginative, unadventurous, inactive, conservative or restrictive approach to the judicial function, but the lessons of practical experience are that unnecessary opinions and findings of courts are fraught with danger.

… The wish to be helpful to users is understandable. It may even be commendable. But bodies established to adjudicate on disputes are not in the business of giving advisory opinions to litigants or potential litigants. They should take care not to be, or to feel, pressured by the parties or by interveners or by critics to do things which they are not intended, qualified or equipped to do. In general, more harm than good is likely to be done by deciding more than is necessary for the adjudication of the actual dispute."

II. ISSUES TO BE DECIDED

All parties invited the Tribunal to issue a decision on final relief. In the light of the parties' submissions, we identified the following remaining questions:

(a) What Order should the Tribunal make to remedy the unfair pricing abuse?

(b) What Order should the Tribunal make to remedy the margin squeeze abuse?

(c) Given that the parties agreed that Albion should be awarded its costs, on what basis should they be assessed if not agreed? Dwr Cymru did not object in principle to the making of an interim payment on account of costs but there was a dispute between the parties as to the appropriate amount.

On the questions we have identified, the submissions of the parties were as follows:

(a) Albion asked the Tribunal to make a Declaration that Dwr Cymru had abused its dominant position in the manner described in the Tribunal's earlier judgments. Albion also sought an order modifying the First Access Price and the Bulk Supply Price. Dwr Cymru and the Authority agreed with Albion that it is entitled to declaratory relief (although the terms were not agreed), but argued that final Directions were (i) unnecessary in respect of the First Access Price since the parties had agreed a revised access price; and (ii) outside the Tribunal's jurisdiction in relation to the Bulk Supply Price.

(b) To secure a minimum margin, Albion sought an order that the retail price charged by Dwr Cymru to any industrial user should exceed the Bulk Supply Price by a minimum of 5p/m³. Dwr Cymru and the Authority opposed that application. They contended that the Tribunal had no jurisdiction to make a final order as regards bulk supplies; the Tribunal has not made any findings on the minimum margin in the context of common carriage; and it would not be appropriate for there to be a further investigation of this issue.

(c) Albion claimed that it should be awarded its costs accumulated since the Tribunal's judgment on costs of 8 January 2007 ([2007] CAT 1). Dwr Cymru and the Authority agreed that they should pay Albion's legal costs, but only if reasonably incurred and subject to detailed assessment if not agreed.

In section III below we set out the statutory provisions and deal with the unfair pricing abuse. We consider the margin squeeze abuse at section IV. At sections V and VI we deal respectively with costs and the final Order of the Tribunal.

III. WHAT ORDER SHOULD THE TRIBUNAL MAKE TO REMEDY THE UNFAIR PRICING ABUSE?

Albion invited the Tribunal to make a Declaration in the following terms:

"1. In March 2001 and thereafter, Dwr Cymru Cyfyngedig ("Dwr Cymru") abused its dominant position within the meaning of section 18 of the Competition Act 1998 by quoting a First Access Price which:

(1) was both excessive and unfair in itself".

We were asked to Order that:

"2. … the common carriage access price offered by Dwr Cymru to Albion Water Limited ("Albion") for the treatment and distribution of non-potable water through the Ashgrove system shall be:

(1) the mean figure for distribution and treatment costs found by the Tribunal, 14.4p/m³, indexed according to the Producer Prices Index (PLLV); plus

(2) the agreed costs for any other necessary services required, such costs to be referred to independent arbitration if not agreed.

3. … the bulk supply agreement between Dwr Cymru and Albion shall remain in force and the price for bulk supply of non-potable water supplied by Dwr Cymru to Albion through the Ashgrove system shall be based on:

(1) 14.4p/m³as indexed by the Producer Prices Index (PLLV); plus

(2) the costs of the Heronbridge bulk supply, as invoiced by United Utilities to Dwr Cymru".

For reasons which will become clear from the discussion below, Dwr Cymru and the Authority strongly contested Albion's application for final relief in relation to the Bulk Supply Price. Albion currently purchases a "bulk supply" of non-potable water from Dwr Cymru, based on a continuation of the Second Bulk Supply Agreement dated 10 March 1999, for onward sale to Shotton Paper (see paragraphs [96]-[98] of the main judgment). The price for this bulk supply is referred to in these proceedings as the "Bulk Supply Price". Pending the determination of this appeal, there has been an interim order in this case requiring Dwr Cymru to reduce the Bulk Supply Price to Albion by 3.55p/m³ (see paragraphs [314]-[359] of the further judgment). At the time of this Judgment, the Bulk Supply Price is 25.19p/m³.

Dwr Cymru submitted that the Tribunal should simply make a final Declaration, as follows:

"1. In March 2001 Dwr Cymru abused its dominant position within the meaning of section 18 of the Competition Act 1998 by quoting an indicative access price for common carriage services which:

(1) was both excessive and unfair in itself".

Before dealing with the merits of these applications, it is convenient to set out the legal framework. Following the Tribunal's findings that Dwr Cymru abused its dominant position, the powers of the Tribunal are contained in paragraph 3 of Schedule 8 to the Competition Act 1998, the material provisions of which are:

"3 (1) The Tribunal must determine the appeal on the merits by reference to the grounds of appeal set out in the notice of appeal.

(2) The Tribunal may confirm or set aside the decision which is the subject of the appeal, or any part of it, and may –

(a) remit the matter to the [Authority],

…

(d) give such directions, or take such other steps, as the [Authority] could itself have given or taken, or

(e) make any other decision which the [Authority] could itself have made.

(3) Any decision of the Tribunal on an appeal has the same effect, and may be enforced in the same manner, as a decision of the [Authority]."

The parties agreed that the Tribunal has the same powers as the Authority to give such Directions as it considers appropriate to bring the infringement (our emphasis) to an end. In that connection section 33 of the Act provides:

"(1) If the [Authority] has made a decision that conduct infringes the Chapter II prohibition or that it infringes the prohibition in Article 82 it may give to such person or persons as it considers appropriate such directions as it considers appropriate to bring the infringement to an end.

…

(3) A direction under this section may, in particular, include provision-

(a) requiring the person concerned to modify the conduct in question; or

(b) requiring him to cease that conduct.

(4) A direction under this section must be given in writing."

Such Directions may be enforced by the Authority on an application to the court: section 34.

Summary of the parties' submissions

Albion's position before the Tribunal essentially was that the Tribunal should (i) declare that Dwr Cymru has abused its dominant position in the manner found in the Tribunal's judgments; (ii) set the First Access Price for the treatment and distribution of non-potable water through the Ashgrove system at no more than 14.4p/m³ in 2000/2001 prices; and (iii) set the Bulk Supply Price.

The case for Albion principally focused on the Bulk Supply Price since that is the price which it currently pays Dwr Cymru for the supply of non-potable water. Albion accepted that the Bulk Supply Price was not part of its complaint, and was not the direct subject-matter of its appeal. However, Albion argued that the Tribunal has recognised "the validity of the First Access Price and the validity of the Bulk Supply Price have become closely intertwined" in these proceedings (see paragraph [311] of the further judgment). The strong "read across" between the two prices should confer jurisdiction on the Tribunal to remedy the unfair pricing abuse by setting the Bulk Supply Price.

Mr Thompson QC, who appeared on behalf of Albion, took us to correspondence between the parties which, it was submitted, showed that all parties agreed that it would not be satisfactory to leave the Bulk Supply Agreement undetermined. Mr Thompson also drew our attention to the powers of the European Commission contained in Article 7(1) of Regulation No 1/2003 (OJ 2003 L 1, p. 1) which may impose remedies which are proportionate to the infringement and necessary to bring the infringement effectively to an end. His submission, in short, was that Albion's draft order represented the minimum needed for a proportionate and effective remedy. Should the Tribunal fail to give the Directions sought by Albion, then Albion would be denied any meaningful remedy and the Act would be ineffectual.

Mr Vajda QC for Dwr Cymru and Miss Sloane for the Authority both took issue with Albion's proposed Directions. Their argument, in short, was that declaratory relief was all that was required. No final order was required to set the First Access Price since Albion and Dwr Cymru had already agreed a revised access price. Miss Sloane submitted that the Bulk Supply Price was neither the subject of the Decision nor any of the Tribunal's judgments. Whilst the Tribunal had made certain observations about the Bulk Supply Price, the Tribunal had recognised that price was "not, as such, under challenge in the current proceedings" (paragraph [760] of the main judgment). We would be acting outside our jurisdiction if this Tribunal gave Directions in the form of paragraph 3 of Albion's draft order. Even if there were now reasonable grounds to suspect the Bulk Supply Price of being an abuse, those grounds provided no jurisdiction for the Tribunal to give final Directions (relying on section 33 and paragraph 3(2)(d) of Schedule 8 to the Act). Nor does the interim relief Order of 20 November 2006 reducing the Bulk Supply Price by 3.55p/m³ justify final relief; when this appeal ends the interim order simply falls away.

Unfair pricing abuse: The Tribunal's discussion and conclusions

The parties agreed that the Tribunal has jurisdiction to give Directions to bring the infringements found by the Tribunal to an end. The parties also agreed that the Tribunal had found the First Access Price was an infringement of the Chapter II prohibition. What essentially separated them was how to bring the infringement to an end.

Albion and Dwr Cymru informed the Tribunal that they had agreed a revised First Access Price of 14.4p/m³ in 2000/2001 prices (based on the average of the three costs figures set out in paragraph [197] of the unfair pricing judgment). Given the parties' agreement, Dwr Cymru submitted that no final order was required to bring the infringement to an end.

The Tribunal rejects Dwr Cymru's submission that it should not require a reduction in the First Access Price. The Tribunal will give a Direction in respect of the access price offered by Dwr Cymru to Albion for partial treatment and common carriage of non-potable water through the Ashgrove system. This is a Direction which the Authority could itself have given. We note that the parties have agreed that the First Access Price should now be the average figure for the maximum costs found by the Tribunal which were reasonably attributable to the service of the transportation and partial treatment of water by Dwr Cymru, generally and through the Ashgrove system in particular, i.e. 14.4p/m³. In our judgment, a common carriage access price offered by Dwr Cymru to Albion, not exceeding 14.4p/m³ (in 2000/2001 prices) would not constitute conduct having the same or equivalent effect as the infringement identified in the Tribunal's earlier judgments (see further paragraphs [37]-[39] below). Against the background of this case, and in particular the numerous obstacles raised by Dwr Cymru to Albion's common carriage proposal, the Tribunal considers that the most effective way to prevent Dwr Cymru charging unfair prices for common carriage now, and in the future, is to give a Direction in the form at the end of this Judgment. We note that the Authority does not object to the Tribunal giving such a Direction. Further, the Tribunal considers that its proposed Direction is appropriate because it not only brings the infringement to an end, but also has the important benefit of facilitating greater competition in the supply of non-potable water to the customers supplied through the Ashgrove system. In the absence of any Direction, as Albion pointed out in paragraph 26 of its written submissions, there is no guarantee that Dwr Cymru will maintain its offer to provide common carriage services at no more than the average of the three maximum cost figures found by the Tribunal.

Albion also applied for the revised First Access Price of 14.4p/m³to be adjusted according to the "Producer Prices Index" to protect the parties from the consequences of inflation since 2000/2001 (see paragraph 2(2) of Albion's draft order). In contrast Dwr Cymru proposed that the revised First Access Price be indexed by reference to the Retail Prices Index. The Tribunal declines to make any findings as to the appropriate index by which a common carriage price should be adjusted. In our judgment, this is a matter which properly falls to be addressed by commercial negotiation between the parties, and is no part of these proceedings.

The major disagreement between Albion and Dwr Cymru about the appropriate remedy for the unfair pricing abuse arises out of the fact that common carriage remains a live issue. Unless and until Albion and Dwr Cymru enter into a common carriage agreement, the existing bulk supply arrangement will (presumably) continue. It was for this reason that the primary focus of the argument before us related to whether the Tribunal has jurisdiction to make a final order as regards the Bulk Supply Price.

After considering all the arguments, the Tribunal finds that it does not have jurisdiction to set the level of the Bulk Supply Price in the manner proposed by Albion in its draft order.

The Tribunal has jurisdiction under paragraph 3(2) of Schedule 8 to the Act to reach its own decision and give Directions in respect of a matter forming part of the decision under appeal. This is clear on the face of the Act, and any lingering uncertainty was dispelled by the judgment of Richards LJ in Dwr Cymru Cyfyngedig v Albion Water Ltd [2008] EWCA Civ 536, at paragraph [127].

Pursuant to Schedule 8, paragraph 3(2)(d), this Tribunal may determine upon "directions, or … such other steps, as the [Authority] could itself have given or taken". Section 33 permits the Authority to give such Directions as it considers appropriate to bring the infringement to an end. The wording of section 33 does not envisage a remedy that would prevent a dominant firm behaving in a way that substantially lessens competition without a prior finding of infringement. The scheme of the Act has as its purpose that the decision-maker should require the discontinuation of the infringement. The Order sought by Albion is quoted in paragraph [9] above and required us to consider whether the infringement in this case extends to the Bulk Supply Price.

The Tribunal has found that Dwr Cymru infringed Chapter II by offering a First Access Price for (proposed) common carriage which (a) was excessive and unfair in itself, and (b) gave rise to an abusive margin squeeze. At no point did the Tribunal find that the Bulk Supply Price constituted an infringement of the Chapter II prohibition. Moreover, Albion rightly acknowledged in paragraph 28 of its skeleton argument that the Bulk Supply Price "was not the direct subject-matter of its complaint to the Authority or its appeal to the Tribunal". Indeed the Tribunal described the subject matter of the appeal in paragraph [89] of the main judgment:

"It is the alleged failure of Dwr Cymru to offer what Albion considers to be a reasonable common carriage price, and the Director's finding in the Decision that the common carriage price offered by Dwr Cymru did not constitute an abuse of a dominant position within the meaning of the Chapter II prohibition, which form the subject matter of this appeal."

Albion argued, however, that while its complaint concerned the First Access Price, these proceedings clearly show that the lawfulness of the Bulk Supply Price is as questionable as the First Access Price. In those circumstances, it would have been open to the Authority (and thus the Tribunal) to make a Direction to modify not only the First Access Price, but also the Bulk Supply Price. The argument is, in essence, that the Tribunal found the Bulk Supply Price was an infringement by necessary implication.

The Tribunal made no such finding. The Tribunal considered the relationship between the First Access Price and Bulk Supply Price at paragraphs [329] to [335] of the further judgment. We accept that the Tribunal had regard to the costs underlying the Bulk Supply Price, since the Authority relied on the Bulk Supply Price as the basis for the ECPR calculation. In itself, however, this consideration has no bearing on the central issue as to whether the Bulk Supply Price was found to be an abuse of a dominant position.

The parties agreed that, in this case, only two of the four elements constituting the Bulk Supply Price have been considered by the Tribunal: first, the cost of partial treatment; and second, the transportation cost of non-potable water through the Ashgrove system. The third and fourth elements, that is the water resources cost (i.e. the abstraction of raw water, any necessary pumping from source, and the transport of raw water to a treatment works) and certain ancillary costs (such as the costs of back-up supply), have not been considered. As the Tribunal noted in paragraphs [104] to [105] of its judgment refusing Dwr Cymru permission to appeal against the main and further judgments ([2007] CAT 8):

"… It was plainly necessary for the Tribunal to have regard to the costs underlying the Bulk Supply Price, since the Director relied on the Bulk Supply Price as the basis for the ECPR calculation at paragraphs 329 and 338 of the Decision (see e.g. paragraphs 747 to 760 of the judgment of 6 October, and paragraph 288 of the judgment of 18 December). As it happens, the Bulk Supply Price has remained broadly the same (around 26p/m3) up to the present day.

However, that does not imply that the Tribunal has taken any position, in its judgments or otherwise, in relation to what the level of any contemporaneous or future Bulk Supply Price should be." (emphasis added)

In addition, we observe that the Bulk Supply Price did not play any material part in the reasoning that led the Tribunal to its conclusion that the First Access Price was excessive and unfair in itself.

Thus we have concluded that the Tribunal's power to give final Directions in accordance with paragraph 3(2)(d) of Schedule 8 is limited to Directions which the Authority could have made. The Tribunal cannot give a Direction in respect of the Bulk Supply Price because it has made no finding (expressly or by necessary implication) as to whether that price was an abuse of a dominant position.

There was some debate in the course of argument as to the relevance of the Tribunal's interim Order of 20 November 2006. That Order required Dwr Cymru to reduce the Bulk Supply Price that would otherwise be payable by Albion by 3.55p/m³. The several different routes by which the Tribunal had jurisdiction to continue the interim relief in place since June 2004 were set out at paragraphs [345] to [354] of the further judgment. None of these routes mean that the Tribunal has jurisdiction to make any final order as regards the Bulk Supply Price. At one point the Authority suggested that the interim Order could remain in place until a common carriage price had either been agreed or set by the Tribunal. We are unable to accept that suggestion. Albion and Dwr Cymru agreed that the interim relief should now cease to have effect. In our judgment, the interim order was necessary to protect Albion's position pending the conclusion of this appeal (see paragraphs [318], [336], [338], and [345] of the further judgment). Interim relief cannot outlive the appeal to which it relates; and interim relief in relation to the Bulk Supply Price was just that – an interim measure necessary to preserve the position of Albion pending the final outcome of the litigation.

Despite Mr Thompson's persuasiveness, we do not consider that final relief can be dealt with on the sweeping basis that, because the Bulk Supply Price is related to these proceedings, in the sense of being relevant to interim relief and the ECPR calculation, it is necessarily included within the Tribunal's powers. Our conclusion can only relate to the infringements found by the Tribunal, and the statutory limits on the Tribunal's jurisdiction to give Directions. If the Bulk Supply Price cannot be agreed, it will have to be referred to the Authority.

The Tribunal recognises that this conclusion is unsatisfactory from Albion's viewpoint. However, at the hearing Mr Vajda indicated Dwr Cymru was prepared to enter into an agreement with Albion whereby both parties refer the determination of the Bulk Supply Price to the Authority under section 40 of the Water Industry Act 1991 (without prejudice to Albion's rights under the 1998 Act). Pending that determination (with any decrease being backdated to the date of the agreement), Dwr Cymru was prepared to continue to accept a reduction of the Bulk Supply Price by 3.55p/m³, which is the amount ordered by the Tribunal in its interim order. Whilst this sector-specific regulation cannot preclude the application of the Act, it may be that outstanding matters can now most conveniently be dealt with by the Authority making a determination of the potable and non-potable bulk supply prices. Miss Sloane indicated that the Authority would have proper regard to the Tribunal's judgments as part of any future re-determination of the Bulk Supply Price.

There are two further issues which bear on the unfair pricing abuse and call for our consideration. First, should the Tribunal make a Direction with a view to preventing Dwr Cymru's infringement of the Chapter II prohibition, or any similar infringement, arising in the future? Second, what is the correct form of the declaratory relief?

On the first of those issues, we were referred to Article 3 of the decision in Eurofix-Bauco v Hilti (OJ 1988 L 65, p. 19) in which the European Commission ordered Hilti AG to refrain from measures "having an equivalent effect" to those found to have been abusive. Likewise, in Genzyme v OFT (remedy) [2005] CAT 32, a case concerning the sale of a drug at a price that did not allow an independent competitor to recover a proper margin on the downstream activity, the Tribunal expressed the view:

"In our judgment, the power to make a direction under section 33 of the Act includes the power to ensure that an infringement is not repeated, if the OFT in its discretion considers that such a direction is necessary. Moreover, in our view, the power "to bring the infringement to an end" covers conduct closely linked to, or to the like effect as, the infringement found, otherwise section 33 would be ineffective. Similarly, the Tribunal's powers to give such directions or make any decision the OFT could have given or made must, it seems to us, be construed as a power to give a direction that is adapted to the developments that have taken place in the course of the proceedings, provided that the underlying problem to be addressed remains the same or similar. Otherwise, a kind of "catch as catch can" situation could arise in which a dominant undertaking could, by constantly changing its arrangements, keep the competition authorities at bay indefinitely." (paragraph [233]).

At the hearing Mr Thompson confirmed that (as a minimum) Albion sought an order in terms similar to Genzyme, and Miss Sloane indicated that the Authority would not oppose the Tribunal making such an order.

In our judgment, such an order reflects Dwr Cymru's ongoing special responsibility not to allow its conduct to impair genuine undistorted competition (see paragraph [290] of the further judgment). Further, we are keen to prevent any similar infringement to those identified by the Tribunal from arising in the future. It is plain that it would be in the interests of Albion and its customers if Dwr Cymru were ordered to refrain from measures "having an equivalent effect" to those found to have been abusive. Additionally, it follows from our earlier conclusion that since the Bulk Supply Price is outside the Tribunal's jurisdiction the concerns expressed by Mr Vajda about the legal certainty of an "equivalent effect" order do not arise (cf. Garden Cottage Foods Ltd v Milk Marketing Board [1984] A.C. 130, at 145H-146D). Accordingly, we will make an order to prevent Dwr Cymru's infringement of the Chapter II prohibition, or any similar infringement, from arising in the future.

The second issue is the wording of the declaratory relief. Albion originally sought an order declaring that: "In March 2001 and thereafter, Dwr Cymru Cyfyngedig abused its dominant position within the meaning of section 18 of the Competition Act 1998 by quoting a First Access Price". We have italicised the contentious words.

Albion submitted that the commercial situation that has prevailed since March 2001 is the direct result of the abusive conduct, namely the First Access Price forestalling the proposed common carriage agreement and requiring the continuation of the Second Bulk Supply Agreement. Albion's draft order invited the Tribunal to find that the conduct of Dwr Cymru constituted an ongoing abuse that could have (but has not) been terminated at any time since March 2001.

Mr Vajda submitted it is plain from the unfair pricing judgment that the First Access Price of 23.2p/m³, which Dwr Cymru was minded to charge Albion for the common carriage services, related to the year 2000/2001. (See e.g. paragraphs [8], [40], [46], [50] and [275] of the judgment on unfair pricing.)

Following the oral hearing, in an attempt to agree the form of the final order, Albion removed the reference to "and thereafter". We have decided that our Declaration will omit any temporal aspect.

IV. WHAT ORDER SHOULD THE TRIBUNAL MAKE TO REMEDY THE MARGIN SQUEEZE ABUSE?

The Tribunal's finding of abusive margin squeeze was based essentially on the fact that the First Access Price payable to Dwr Cymru for the (upstream) transportation and partial treatment of water left Albion with no profit margin with which to compete in the (downstream) retail market for the supply of non-potable water to Shotton Paper.

Albion invited the Tribunal to make a Declaration in the following terms:

"1. In March 2001 and thereafter, Dwr Cymru Cyfyngedig ("Dwr Cymru") abused its dominant position within the meaning of section 18 of the Competition Act 1998 by quoting a First Access Price which:

…

(2) imposed a margin squeeze".

Albion also sought an Order that:

"Dwr Cymru's tariff offered to retail customers for the bulk supply of non-potable water shall exceed the wholesale price for such supply offered to Albion by a minimum of 5p/m³".

Summary of parties' submissions