Accreditation bodies: CAT judgment on application of competition law

A recent judgment by the UK Competition Appeal Tribunal (CAT) has confirmed that an accreditation body can be an ‘undertaking’ under the Competition Act 1998 and so can be challenged in the UK courts for alleged anti-competitive conduct.

NSAR, a not-for-profit company limited by guarantee, was established with Government support through the Skills Funding Agency as a national skills academy in 2011. Its membership includes major companies active in railway infrastructure and engineering as well as training providers. Much of its income comes from sponsoring members such as Network Rail and TfL. Amongst its activities, NSAR manages on behalf of Network Rail the auditing and accreditation of training providers under the Rail Training Accreditation Scheme (RTAS).

In June 2016, UKRS (a member of NSAR and an accredited RTAS training provider), applied to the CAT for an interim injunction against NSAR which was attempting to impose a three month suspension on UKRS. UKRS claimed that NSAR’s decision was discriminatory and not objectively justifiable and alleged that NSAR had therefore breached competition law by abusing its dominant position as an accreditation body in the railway sector. NSAR applied to strike out the claim on the grounds that it was not an undertaking for the purpose of competition law (which therefore did not apply to it).

The CAT decided that the question of whether NSAR was an undertaking needed to be determined as a preliminary issue before it could consider whether NSAR had abused a dominant position on the market for RTAS accrediting and auditing services. The CAT has now published its judgment on that issue.

The CAT rejected NSAR’s argument that it was acting as a regulator in ensuring safety standards on behalf of Network Rail and reiterated that, even if NSAR were regarded as a regulator, a body established by industry as a form of self-regulation could also be an undertaking under competition law. The fact that NSAR was non-profit making was relevant but its role could be feasibly carried out by a commercial profit-making organisation. Crucially, it was not exercising any public powers or carrying out a function of the State. In acting on Network Rail’s behalf for these services, NSAR simply was an undertaking like Network Rail.

The judgment is particularly relevant to bodies which carry out activities in the public interest (and may be not for profit) or public bodies undertaking commercial activities. It provides a good, up to date summary of the key legal principles in assessing whether such bodies are undertakings and so caught by competition law. It also highlights that such assessments must be carried out on a case-by-case basis.

If you are interested in discussing the issues raised by this case, please do contact us.

This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of July 19, 2017.