STORY
The Competition and Markets Authority (CMA) today urged government reform of the water sector’s regulatory accountability mechanisms, advocating a consistent appeal process in place of the current “redetermination” system and proposing that appeals be heard by a specialist judicial body such as the Competition Appeal Tribunal (CAT). In its response to the Independent Water Sector Regulatory System Commission’s call for evidence, the CMA highlighted two key recommendations: first, that all regulatory decisions—including Ofwat’s price controls—be subject to an appeal on defined legal grounds rather than a full redetermination; and second, that the function of hearing these appeals be transferred from the CMA to an appropriately resourced judicial body.
Under the existing regime, Ofwat price control decisions can be “redetermined” by the CMA—a process that effectively requires the authority to retake decisions within a six- to twelve-month window, despite Ofwat’s multi-year review cycle. The CMA pointed to the growing scale and complexity of these reviews: its redetermination of PR19 spanned a 12-month process, culminating in a 1,239-page report and costing approximately £31.8 million in combined expenses for the CMA, Ofwat and disputing companies.
By contrast, an appeal framework would focus strictly on identifying legal errors in Ofwat’s original determinations, with the appellate body empowered to quash or remit decisions rather than substitute its own findings. The CMA argued this would deliver greater efficiency, reduce duplicative costs ultimately borne by consumers, and align water regulation with other sectors—such as energy and communications—where appeals are already judicially managed.
The CMA further noted that its core mission is competition enforcement rather than adjudication, and that the unpredictable timing and resource demands of regulatory redeterminations have become a diversion from its primary duties. Vesting appellate functions in the CAT, which possesses dedicated judicial expertise, would better serve both technical scrutiny and legal interpretation. Concluding its submission, the CMA welcomed the opportunity to assist the Commission and stands ready to engage with government on implementing these reforms to reduce regulatory complexity and bolster investor confidence in the water sector.