HCA International v CMA - When it's time to start afresh

10 minute read
02 July 2015


In HCA International Ltd v Competition and Markets Authority, the Court of Appeal looked at when a public body is required to appoint new decision makers where a decision has been held to be unlawful and is remitted to the body to be retaken.

Background

The Competition and Markets Authority (the CMA) has been conducting a competition investigation into the supply of privately funded healthcare services. HCA International Ltd (HCA) is a major provider of such services.

In May 2014, HCA applied to the Competition Appeal Tribunal (the CAT) to challenge decisions the CMA had reached that there were adverse effects on competition associated with the structure of the private healthcare market in central London and that, consequently, HCA should divest itself of two of its hospitals.

Prior to the hearing before the CAT, the CMA conceded some of HCA's arguments and agreed that its decision on divestment and part of its decision on adverse effects should be quashed. In particular, it conceded that there had been errors in its data analysis. It also agreed that it had followed an unfair procedure, because it had revised the insured prices analysis (or IPA) which had informed its decisions and had not given HCA an adequate opportunity to comment on the revised IPA.

Despite agreement that the decisions should be quashed, the parties disagreed over who should retake the decision. HCA submitted that a new inquiry group and case team should be appointed, whereas the CMA's position was that the same individuals could retake the decision.

The CAT held that the original decision makers could retake the decision. In its view, there was no reason which would preclude them from doing so (such as bias or predetermination) and there were persuasive reasons why the matter should be remitted to the same inquiry group, including issues of practicality.

HCA appealed to the Court of Appeal, arguing that:

  • The CAT had failed to give proper regard to the public interest in maintaining confidence in the CMA's decisions, which would be undermined unless new decision makers were appointed.
  • Viewed objectively, the CMA's investigations had been wholly flawed and mishandled and this was a valid reason for appointing new decision makers.
  • Contrary to the CAT's ruling, there would be an appearance of bias if the decision makers stayed the same. Alternatively, they were affected by confirmation bias ('the difficulty of persuading a decision maker that has once made up its mind to change its view').
  • The CAT wrongly took into account the practical difficulties which the CMA would face in appointing new decision makers.
  • The facts of the case demonstrated inappropriate unfairness, including HCA being misled, and a lack of understanding by the original inquiry group (including its understanding relating to why what it did was unlawful and what the impact of that unlawfulness was).
  • In summary, given the group's repeated failure to act competently and fairly in the past, HCA (and the public) could not have confidence that it would do so now.

The CMA argued against all of these points; stating that the normal position was to remit a decision to the original decision makers and that there was no basis to interfere with the CAT's ruling that this was the appropriate course.

The decision

The Court of Appeal set out the appropriate principles to be applied when considering whether the decision should be remitted to the original decision makers:

  • A decision will be remitted to the same decision maker unless that would cause reasonably perceived unfairness to affected parties or damage public confidence in the decision making process. The unfairness concerned is such as contravenes the public law duty of fairness.
  • Many different factors will be relevant to these principles. The presence of actual bias, apparent bias or confirmation bias would make remission to the original decision maker undesirable.
  • The issue is whether, on considering the particular facts, the original decision maker's conduct is such as to create such unfairness or damage to public confidence.

On considering the detailed facts of the case, the Court of Appeal did not find any such reasonably perceived unfairness or damage to public confidence and the appeal was dismissed. In particular, there had not been a complete mishandling of (or fundamental flaw in) the investigation and the CMA's conduct generally had not breached the public law duty of fairness.

The original decision makers were not, on the facts, affected by confirmation bias or apparent bias. It was an important consideration that the inquiry group and the case team were composed of experienced professionals, with no personal interest in the investigation.

Professionalism was also relevant to the issue of public confidence and the handling of the investigation. It would be a very serious matter indeed to decide that the public could not have confidence in the future decision making of an inquiry group made up of such highly experienced professionals.

As the CMA had conceded, it had acted in a procedurally unfair manner in failing to disclose the revised IPA, but a single instance of unfairness will not necessarily lead to the need to remit the decision to new decision makers. The past unfairness must lead to the reasonable conclusion that the original decision makers would or might act unfairly if the decision was remitted to them.

In relation to the practicalities of appointing new decision makers, the main questions (whether failure to make such an appointment would cause reasonably perceived unfairness or damage to public confidence) should be considered before considering any issues around practicality. The cost and delay of appointing new decision makers and other practical issues did not go to the main questions. However, the CAT had correctly followed this approach.

Commentary

The parties agreed that there was generally little assistance to be gained from previous case law on the issue. In that context, this case gives a helpful steer. Following this case, a court will not be quick to order that new decision makers must be appointed to take a remitted decision.

Although the court stated that different principles may also apply to political bodies such as local authorities, it seems likely that the principles will often be the same (in particular where the decision involves regulatory proceedings, rather than a policy decision). Understandably, the principles may be different where a single decision maker is appointed by statute.

In determining whether there was reasonably perceived unfairness or damage to public confidence, it was clear that the court gave significant weight to the experience and professionalism of the individuals originally appointed by the CMA to carry out the investigation. This is consistent with a general approach toward judicial and quasi-judicial decision making; a degree of faith that the decision makers have the ability to undertake their role.

In spite of this, the Court of Appeal made it clear that there will be cases where a decision cannot be remitted to the original decision maker. In high impact decisions, legal challenge may be unavoidable. Decision makers should be mindful of avoiding the creation of evidence or the taking of other steps which might suggest that they could not lawfully continue to be appointed if their initial decision is held to be unlawful.

In this case, HCA made the arguments direct to the CAT and the issue was argued before the court at the outset. This will not always be the case and public bodies will need to consider of their own volition, applying the same principles, whether a decision which is remitted to it should be taken by the same individuals.

In doing so, a key point to take from the case is that the issues of law (for example whether an original decision maker is tainted by bias) must be considered first, discrete from any issues around the practicality of appointing new decision makers. This is a change of emphasis from previous case law (Heard v Sinclair Roche & Temperley). Further, once the issues of law have been considered, either there is an issue requiring new decision makers to be appointed or not. Once the issues of law have been considered, it is not clear what role (if any) issues around the practicality of appointing new decision makers will have to play.

In aiming to make robust decisions and in defending those decisions against any legal challenge, the appointment of new decision makers if that decision is quashed will understandably not be a priority. Nor should it be. However, if a public body has given some thought at an early stage to the replacement of decision makers, it will be in a much better position in the event that such replacement is ordered (or advised).


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