Professor Carolyn Roberts’s effort to represent millions of UK water customers has been rejected by the Court of Appeal. Roberts argued that six UK water companies— including Thames Water, Severn Trent, and United Utilities—misleadingly understated the number of water pollution incidents in their areas, leading Ofwat, the regulator, to set price controls that allowed them to charge consumers more than they otherwise would have.
Professor Roberts argued that if pollution incidents are significantly under-reported, a company could appear to be performing better against its environmental targets than it actually is. This could lead Ofwat to make favourable financial adjustments or avoid imposing penalties. In a sector where consumers have no option but to buy services from a regional monopoly, this would ultimately result in customers paying more than they otherwise would have.
The court examined whether section 18(8) of the Water Industry Act 1991 prevented Professor Roberts’s proposed claims under Chapter II of the Competition Act 1998. This was because the same alleged misreporting also constituted a breach of the companies’ regulatory “conditions of appointment,” especially their duty to provide Ofwat with information necessary for periodic price reviews. The Competition Appeal Tribunal (CAT) concluded it did and accordingly declined to issue a Collective Proceedings Order under section 47B. The Court of Appeal upheld this decision.
The majority acknowledged that her submissions were “put attractively and have considerable force” but held that section 18(8) still has force because, properly analysed, the pleaded “abuse” cannot be established without relying on the licence-based duty to provide accurate information.
Lord Justice Zacaroli dissented. In his view, although inaccurate reporting might also constitute a breach of the companies’ license conditions, that was not an “essential ingredient” of the abuse of dominance claim brought by Professor Roberts. Section 18(8), he stated, is aimed at claims seeking remedies for violations of license conditions, not at competition claims that stem from the same underlying conduct.
