Competition - Office of Fair Trading declining to make reference to Competition Commission - competitor applying for review of decision: correct test to be applied

Office of Fair Trading and others v IBA Healthcare Ltd: CA (Sir Andrew Morritt, Vice-Chancellor, Lord Justice Mance and Lord Justice Carnwath): 19 February 2004

Two companies supplying software to the healthcare market proposed to merge.

A third company, I Ltd, complained to the Office of Fair Trading (OFT).

Section 33(1) of the Enterprise Act 2002 required the OFT to make a reference to the Competition Commission where it believed that the merger might be expected to result in a substantial lessening of competition.

The OFT decided not to make a reference.

I Ltd applied to the Competition Appeal Tribunal for review of that decision.

The tribunal considered that the OFT had applied the wrong test under section 33(1) and formulated its own two-stage test, quashed the decision and remitted it to OFT for reconsideration.

The companies and OFT appealed.

Peter Roth QC and Daniel Beard (instructed by the Director of Legal Services, Office of Fair Trading) for the Office of Fair Trading; David Anderson QC and Kelyn Bacon (instructed by Ashurst) for the companies; Nicholas Green QC and Aidan Robertson (instructed by Macfarlanes) for IBA Healthcare.

Held, dismissing the appeal, that the words of section 33(1) were to be given their ordinary meaning; that the OFT had applied the wrong test and the tribunal had erred in formulating a two-stage test; that, applying the correct test, the relevant belief was that the merger 'may be' expected to result in a substantial lessening of competition, not that the commission 'may' in due course decide that the merger might be expected to result in a substantial lessening of competition; that the tribunal had applied the principles of judicial review correctly and despite the mistaken adoption of a two-tier test, its decision should stand.