When should a decision be remitted to a different decision-maker?

The Court of Appeal’s answer to this question in HCA International Limited v CMA [2015] EWCA Civ 492  was, in effect: rarely. The judgment, which contains some serious criticism of the CMA even though it won the case, illustrates just how high the threshold is before a court will insist that a remitted decision should go to a new decision-maker. It is not enough for the original decision-maker to have made a mistake, however conspicuous. Rather, there needs to be a reasonable perception of unfairness or damage to public confidence in the regulatory process.

The background was the CMA’s private healthcare market investigation, which determined that HCA should divest itself of two hospitals in central London. That decision was premised in part on the CMA’s insured price analysis (“IPA”), which HCA argued (on an appeal to the Competition Appeal Tribunal) contained serious flaws. The CMA eventually accepted that its divestment decision should be quashed, and the CAT held that the matter should be remitted to the original CMA inquiry group for re-determination.

HCA appealed, arguing that the divestment decision should have been remitted to a different CMA inquiry group. It submitted that the original panel had behaved so incompetently and unfairly in the handling of their decision that neither HCA nor the public could have confidence in its re-determination.

In particular, the original group had made significant changes to its analysis between its provisional findings and final decision. It had told all other parties that it had made these changes but had withheld this information from HCA. Worse, it had held a hearing with HCA at which the analysis was debated, without telling HCA’s representatives that the analysis had been revised. Finally, the inquiry group’s evidence demonstrated that it did not properly understand why what it had done was unfair, and it continued to attempt to justify an obviously inappropriate procedure – meaning that it could not be trusted with the decision again.

The Court of Appeal dismissed HCA’s appeal. It explained the correct principle: remission would be to the same decision-maker unless that would cause reasonably perceived unfairness (in the public law sense) to the affected parties, or would damage public confidence in the decision-making process. Vos LJ declined to list the various factors which would be relevant to the application of this principle – these would depend heavily on the circumstances – although he did say that the presence of bias in some form would make remission to the original decision-maker undesirable.

In turning to the facts before it, the Court of Appeal clearly felt that the behaviour of the original inquiry group had been conspicuously unfair. The CMA had held a hearing with HCA and listened to submissions being made on a basis that it knew had changed. As Vos LJ said, “it would have been the easiest thing in the world for the CMA to tell HCA [that the analysis had been revised]”; not only did it not do this, but it also told all other parties. The Court of Appeal also accepted HCA’s submission that the evidence of the original group wrongly attempted to justify its procedure and failed to grasp how it had been unfair.

None of this was enough, however. While the inquiry panel had behaved wrongly and unfairly, that did not mean that either HCA or an objective observer would be reasonably justified in a perception that the inquiry group would act unfairly in the future. The group had not acted in bad faith. Its reasons for not telling HCA about the revision – that it wished to bring the consultation to a close speedily – were honest, if illegitimate. Moreover, the group was composed of experienced professionals who had no personal interest in the case – although they had gone wrong once, it was not reasonable to perceive that they would do the same again.

HCA can take some comfort from the fact that it persuaded the Court of Appeal to adopt a broad legal test as to when a decision should be remitted to a different decision-maker. Further, Vos LJ’s comment that he gave the facts “anxious scrutiny” suggests that HCA came close to persuading him that this test was satisfied. But the lesson for practitioners is that a court will take the view that regulators make mistakes; but a mistake – even an obvious one – is not enough to mean that the same regulatory group should not reconsider a decision. What is necessary is a reasonable perception that a similar mistake will be made again.

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