Court Finds Error Of Law In Code Amendment

• Published date: 31 May 2022
• Subject Matter: Anti-trust/Competition Law, Government, Public Sector, Litigation, Mediation & Arbitration, Energy and Natural Resources, Antitrust, EU Competition , Energy Law, Oil, Gas & Electricity, Constitutional & Administrative Law, Trials & Appeals & Compensation
• Law Firm: Herbert Smith Freehills
• Author: Mr Andrew Lidbetter, Nusrat Zar and Jasveer Randhawa

In R (on the application of SSE Generation Ltd) v Competition and Markets Authority [2022] EWHC 865 (Admin), the Court found an error of law on the part of the Competition and Markets Authority ('CMA') in the context of amendments made to an energy code.

Key Points

• There is no hierarchy of obligations in legislation, absent contrary language. A breach of one provision is as much of a breach as a breach of another provision.
• Whereas a legal standard must be incorporated correctly as a matter of law, an objective that requires a balance of considerations will be subjected to less scrutiny by the Court.

Background

SSE Generation Limited ('SSE'), an electricity generator, sought judicial review of the decision of the CMA to dismiss SSE's appeal against two modifications of the Connection and Use of System Code ('the Code') by the Gas and Electricity Markets Authority ('GEMA'). The Code sets the charges paid by electricity generators to use the national high voltage electricity transmission system.

The modifications, in giving effect to retained EU law, Regulation 838/2010 ('the Regulation'), implemented certain network operator charges within a specified range ('the permitted range'), but excluded from the calculation of that range the charges relating to physical connection to, or the upgrade of, the transmission network itself ('the connection exclusion').

SSE's main ground of challenge was that the CMA erred in law in failing to conclude that GEMA had itself erred in law by approving a modification to the Code that did not accurately reflect the connection exclusion.

Judgment

The Court (Swift J) found in SSE's favour on the main ground of appeal.

The Court noted that GEMA's decision and the CMA's decision accepted that the connection exclusion was not properly implemented into the Code. The exclusion was over-inclusive: depending on how a generator was connected to the network, charges could have been incorrectly included in the exclusion.

The Court examined the CMA's reasoning for allowing the modification to proceed without the proper implementation of the connection exclusion. The CMA argued that the permitted range was the primary obligation under the Regulation whereas the connection exclusion was a lesser obligation, non-compliance with which did not automatically breach the Regulation.

The Court rejected this contention. As a matter of statutory construction, the...