Supplementary memorandum by

At the hearing on 23rd January before the House of Lords Select Committee on Regulators Lord Dubs asked Ofcom about its working relationship with the and the and whether it was efficient and effective in particular in relation to the referring of matters by Ofcom to those bodies.

Ofcom thought it might be helpful to provide a short supplement to its oral response to Lord Dubs.

Concurrent Power with the Office of Fair Trading

Under the Communications Act 2003 Ofcom was given concurrent jurisdiction with the Office of Fair Trading in relation to the ability to (i) carry out and determine competition investigations in the communications sector under the Competition Act 1998; and consider and (ii) make market investigation references in relation to the communications sector to the Competition Commission under the . 1

The premise for Ofcom’s concurrent jurisdiction with the Office of Fair Trading is, of course, that it may be more appropriate and effective for the sectoral regulator with specialist expertise to consider competition issues in its sector.2

Management of Concurrency in Relation to Competition Act Cases

Ofcom has agreed with the Office of Fair Trading a memorandum of understanding which sets out how competition investigations will be dealt with as between them in order to ensure that they are dealt with in the most effective way.

Broadly, we have agreed that Ofcom is likely to be best placed to act where there is a desire to ensure consistency of regulation within the ambit of Ofcom’s regulatory functions, where Ofcom may be in a better position to appreciate the relationship between the competition case and relevant sectoral regulations and where the specialist experience and knowledge of the communications sector held by Ofcom staff is required. The Office of Fair Trading is likely to be best placed to act where the conduct concerned is potentially criminal, where there is covert or hardcore cartel activity and where the case concerned has effects beyond the areas of Ofcom’s specialist expertise.

1 The Office of Fair Trading and Ofcom are the determinative authorities for competition investigations. However, in relation to domestic market investigations they are first stage authorities which refer to the Competition Commission for determination. 2 Ofcom does not have concurrent jurisdiction with the Office of Fair Trading in relation to mergers. However, when considering mergers in relation to the communication sector, the Office of Fair Trading will ask Ofcom for market information and for sector specific advice.

We liaise with the Office of Fair Trading in each individual case to ensure that the authority best placed handles the case. We have agreed with the Office in each case how those cases would be most effectively handled without any controversy or difficulty. The working relationship with the Office of Fair Trading on this is very good.

Power to Make Market Investigation References

Whilst Ofcom has concurrent powers with the Office of Fair Trading to make market investigation references to the Competition Commission it is in a slightly different position from the Office.

Ofcom has a duty under the EU regulatory framework for electronic communications to review individual communications markets and when doing so to co-ordinate with the European Commission and other national communications regulatory authorities. In carrying out these reviews Ofcom acts as the determinative authority and must where appropriate impose remedies so as to regulate individual communications markets. Ofcom has carried out a significant number of such market reviews.

Ofcom, in deciding whether to make a market investigation reference to the Competition Commission under the domestic legislation, needs to consider first whether it would be more appropriate to deal with the matters under sectoral regulation (or, indeed, under competition law). Many issues of competition will have been addressed by Ofcom’s programme of market reviews so that it would not be appropriate or effective for Ofcom to make market investigation references for those markets. It is most likely to be effective for Ofcom to make references to the Competition Commission in the more limited instances where there are issues which cross over individual communication markets. This was the case in relation to the market investigation reference of BT which Ofcom intended to make if it had not been able to obtain satisfactory undertakings. The position is obviously different for the Office of Fair Trading which does not have a separate duty to regulate markets other than through a market investigation reference to the Competition Commission.

27 February 2007