Creating Financial Accountability For Regulatory Failings

• Published date: 30 May 2023
• Subject Matter: orporate/Commercial Law, Antitrust/Competition Law, Compliance, Corporate and Company Law, Antitrust, EU Competition
• Law Firm: Shepherd and Wedderburn LLP
• Author: Mr Ruairidh Leishman and Euan Murphy

Businesses can be significantly affected by the behaviour of regulated utilities, such as those operating water or transport infrastructure, with failure of these infrastructures resulting in considerable costs for firms. In this article, our Regulatory Risk and Compliance team discusses the increased risk of private court actions against underperforming regulated utilities, spurred on by greater accessibility of collective actions.

Introduction

Our Regulatory Risk and Compliance team (the RRC Team) discusses the increasing risk of private court actions against regulated utilities due to their under-performance. This comes in the context of an uptick in actions generally against utilities, spurred on by an increase in the accessibility of collective actions. Whether it be in relation to the water industry and the discharge of untreated sewage and wastewater into waterways or uncompetitive prices for residential landline services See Justin Le Patourel v BT Group PLC (case number 1381/7/7/21), a steady load of private cases against regulated entities is developing.

This is an evolving area, with some cases progressing through court while others are already gaining publicity even before they have started. The RRC Team will keep this article updated to reflect any developments and provide an insight into useful trends.

Private damages against regulated utilities

Businesses can be significantly affected by the behaviour of regulated utilities, such as those operating water or transport infrastructure. The underperformance of utilities can result in considerable costs for firms, users and wider communities, but remedial action has traditionally been viewed as a matter for the relevant regulators, e.g., via enforcement action. However, we are beginning to see private claims being brought against regulated utilities that run in parallel to their regulatory remedies.

Nature of the claims

Most of these claims will likely be brought under competition law but there are examples of claims in nuisance / trespass in England. We set out some examples of these cases below.

Competition claims

A case is currently being prepared that alleges an abuse of dominance on the part of water and sewage companies, stemming from systematic failures which have led to illegal sewage discharges and an increase in the quality adjusted charges to customers.

In light of these continuous breaches, it might be argued that there has been an excessively low quality of service due to an...