2012 Autumn Statement: competition and regulatory implications

Practical Law UK Legal Update 8-522-9003 (Approx. 6 pages)

2012 Autumn Statement: competition and regulatory implications

by PLC Competition

Law stated as at 05 Dec 2012 • United Kingdom

On 5 December 2012, the Chancellor of Exchequer made his 2012 Autumn Statement, which was accompanied by the publication of an update on the Growth Review, the National Infrastructure Plan 2012 and proposals for a new approach to public private partnerships. This update identifies the main issues in these documents that might be of relevance to competition lawyers.

Speedread

On 5 December 2012, the Chancellor of Exchequer made his 2012 Autumn Statement. This was accompanied by the publication of an update on the Growth Review, an update on the National Infrastructure Plan and proposals for a new approach to public private partnerships. This update identifies the main issues in these documents that might be of relevance to competition lawyers. In particular, the government has announced measures to reduce the burdens of economic regulation, including reviewing appeals processes and incentivising greater use of concurrent competition powers.

The Autumn Statement 2012 sets out the actions the government will take in three areas:

Protecting the economy.
Building a stronger economy for the future.
Fairness.

For PLC's full coverage of the Autumn Statement see PLC Autumn Statement 2012. Announcements in the Autumn Statement 2012 that may be of interest to competition lawyers, include the following:

Economic regulators. The government will take steps to reduce the regulatory burden that might constrain infrastructure investment by:
- reviewing the appeals system for sector regulators to make appeals faster and more efficient;
- asking economic regulators to provide a transparent breakdown of how they calculate their fees; and
- introducing legislation in the Enterprise and Regulatory Reform Bill and amending the Competition and Market Authority framework to increase the incentives for regulators to make better use of their concurrent competition powers, to seek pro-competition solutions to market failures. It is not clear to what extent the government is now talking about making changes beyond those measures already included in the Bill, which implements the government's March 2012 decisions in this respect (see Legal update, Government decisions on establishment of Competition and Markets Authority and reform of UK competition regime).
Broadband. In addition to the £100 million the government committed to create the first 10 super-connected cities, £50 million was announced in Budget 2012 for a second wave of cities. Following a competitive bid process, the winning second wave of cities are: Brighton and Hove, Cambridge, Coventry, Derby, Oxford, Portsmouth, Salford, and York in England; Aberdeen and Perth in Scotland; Newport in Wales; and Derry/Londonderry in Northern Ireland. The availability of funding is subject to state aid approval.
Energy. Following publication of the Energy Bill, the government has now published the Gas Generation Strategy, which set out its view of the expected role for gas in the coming years (see Legal update, DECC publishes Gas Generation Strategy).
Public procurement. The Cabinet Office and HMRC will consult on the use of the procurement process to deter tax avoidance and evasion and the proposed definition of key concepts, with a view to the new arrangements coming to effect from 1 April 2013.

Update to Growth Review

In March 2011, as part of the 2011 Budget, HM Treasury and the Department for Business, Innovation & Skills (BIS) published the government's "Plan for Growth" (see Legal update, Government's Plan for Growth - competition issues). In the Autumn Statement 2011, the government announced further measures as part of the Growth Review and provided an update on the measures identified under the Plan for Growth (see Legal update, 2011 Autumn Statement (including Growth Review and National Infrastructure Plan): competition and regulatory implications). A further update was provided with the 2012 Budget (see Legal update, Update on implementation of Plan for Growth - competition issues).

A further Plan for Growth implementation update has been published alongside the 2012 Autumn Statement. This notes, in particular, that:

The Enterprise and Regulatory Reform Bill is expected to receive Royal Assent by spring 2013, with the Competition and Markets Authority being fully established by April 2014 (see Enterprise and Regulatory Reform Bill 2012-13: competition tracker).
The Smart Meters programme is progressing well. The next round of data and communications services bids is due in December 2012.
In relation to public procurement measures announced in the 2011 Autumn Statement, in particular, the presumption against use of the competitive dialogue procedure is being applied and the Open procedure is now the default route to market for all but the most complex procurements, increasing competition and participation from a diverse range of suppliers. As a result of the Lean Review, procurement turnaround times are reducing and buying behaviour changing (see Legal update, Cabinet Office guidance note on implementing government procurement policies).
Substantial progress has been made in the negotiations to revise the EU Public Procurement Directives. The reforms are expected to be adopted in the first half of 2013. The simplification will lead to more efficient procurement and cost savings for both purchasers and suppliers.
The results of the Department for Transport Fares and Ticketing consultation are being collated and a Government response is due to be published in May 2013 (see Legal update, DfT publishes Command Paper on reforming the railways).
The Civil Aviation Bill is expected to receive Royal Assent by the end of 2012 (Legal update, Civil Aviation Bill has first reading in Parliament and Commons Committee publishes report).

National Infrastructure Plan - 2012 update

In October 2010, the government published a National Infrastructure Plan (see Legal update, Government publishes National Infrastructure Plan 2010). Following an update in 2011, the 2012 update has now been published.

This update sets out the actions that have been taken to meet the ambitions set out in the 2011 National Infrastructure Plan. In particular, it notes that the government has:

Published the Energy Bill in November 2012 to implement reform of the electricity market in from 2014. These reforms will provide certainty to investors to bring forward up to £110 billion of investment in new energy infrastructure (see Legal update, Energy Bill 2012-13 introduced to Parliament).
Committed to £9.4 billion of investment in the rail network between 2014 and 2019. This will support economic growth and jobs, deliver a greener railway and one that is better for passengers and freight (see Legal update, Government announces High Level Output Specification programme for 2014-2019).
Established the Airports Commission to examine the scale and timing of any requirement for additional capacity to maintain the UK’s position as Europe's most important aviation hub, and to identify and evaluate how any need for additional capacity should be met in the short, medium and long term.
Established a framework agreement for Local Authorities to use to deliver rural broadband projects and secured state aid clearance to enable investment to proceed (see Legal update, Commission approves UK umbrella support scheme for broadband investment).
Announced the first 10 "super-connected" cities that have been successful in securing a total of £100 million of funding to deliver ultrafast broadband and public wireless connectivity.
Worked with Ofcom to secure industry agreement to allow the auction of spectrum that will enable 4G mobile services to proceed (see Legal update, Ofcom and DCMS statements on 4G spectrum auction).
Published a draft Water Bill to take forward water market reforms that benefit customers and stimulate growth (see Legal update, Draft Water Bill: competition and regulatory implications).
Brought forward a Growth and Infrastructure Bill, including measures to amend the special parliamentary procedures which apply to major infrastructure and help remove red tape which hinders superfast broadband being rolled out to local homes and businesses (see Legal updates, Speech by Edward Davey on the forthcoming Energy Bill and the Growth and Infrastructure Bill and Legal update, Growth and Infrastructure Bill 2012: telecoms implications).
Published its Gas Generation Strategy (see Legal update, DECC publishes Gas Generation Strategy).

A new approach to public private partnerships

To accompany the Autumn Statement the government published details of the conclusions of its review of PFI and its new approach, PF2, for involving private finance in the delivery of public infrastructures and services. This, inter alia, sets out proposals for improving the way in which such projects are procured in order to ensure that procurement is much faster and cheaper than in the past. Notably, the government is:

Improving public sector procurement capability by strengthening the mandate of Infrastructure UK and supporting departmental centralised procurement units.
Establishing firm commitments to procurement timescales by requiring departmental ministers to state their commitment to an ambitious procurement timetable when they submit business cases to the Treasury for approval. The competitive tendering phase of PF2 projects will not be allowed to take longer than 18 months unless an exemption is agreed by the Chief Secretary. This will be measured from the issuance of project tender to the appointment of a preferred bidder;
Introducing a standardised and efficient approach to PF2 procurement to running PF2 procurement following the Government's Lean Sourcing principles (including improved pre-procurement preparation, greater market testing and a shorter dialogue period) and launching a comprehensive suite of standard documentation.
Strengthening the scrutiny of PF2 project preparation by introducing additional Treasury checks in the business case approval process to ensure that projects have undertaken a sufficient level of project preparation prior to issuing a procurement tender.

For further information on the government's reforms see see PLC Public Sector Legal update, 2012 Autumn Statement: PFI reform.

Source: HM Treasury website: 2012 Autumn Statement and Accompanying Documents.

2012 Autumn Statement: competition and regulatory implications | Practical Law