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The Supreme Court in R (o.t.a. Gallaher et al) v. Competition and Markets Authority  UKSC 25 dealt with concepts at the core of UK public law, finding that there are no freestanding principles of fairness and equal treatment, and re-examining the grounds on which judicial review can be brought.
The Competition and Markets Authority’s predecessor, the Office of Fair Trading (“OFT”), commenced an investigation in 2003 into tobacco price-fixing, and in 2008 a Statement of Objections was sent to 11 retailers and two manufacturers. Six parties under investigation, including the two respondents in Gallaher, concluded Early Resolution Agreements (“ERA”) with the OFT. Such agreements indicated to the signatories the level of penalties to be imposed and offered them the opportunity to reduce these through procedural co-operation. The representatives of one of the parties who concluded an ERA with the OFT, TM Retail, approached the OFT to see what the outcome would be if another party, who had not entered into an ERA, successfully appealed against an OFT decision on tobacco price fixing. The resulting exchange led TM Retail to believe that a successful appeal by another party would result in a withdrawal or variation of the decision against TM Retail even though they had concluded an ERA. These communications were not shared with other organisations that had concluded ERAs with the OFT.
In 2010 the OFT decision against those under investigation for tobacco price fixing was made. TM Retail and the respondents elected to pay the penalties imposed in the ERAs, taking the benefit of the reductions. Other parties against whom the decision had been made sought to appeal against it, and in 2011 the Competition Appeals Tribunal allowed six appeals. TM Retail sought to rely on their previous communications with the OFT to take advantage of these decisions. The OFT concluded that “in the light of the particular assurances” provided to TM Retail it would repay the penalty and make a contribution to their costs. The respondents wrote to the OFT arguing that they also should be given the benefit of the assurances made to TMR. These requests were refused. The respondents lodged judicial review proceedings against the OFT claiming that they should also have had their penalty repaid and a contribution to costs.
The respondents based their arguments on the requirements of fairness and equal treatment, claiming that if TM Retail had their penalty repaid by the OFT and received a contribution to costs, then they too should receive a payment. The appellants argued that the representation outside of the Early Resolution Agreement had been made to TM Retail in error, and the requirements of fairness and equal treatment did not require this error to be replicated. The High Court agreed that the principle of fairness and equal treatment did not require a mistake to be replicated. The Court of Appeal, reversing the decision, held that the OFT should not be permitted to resile from a mistake because of the unfair and unequal treatment of the respondents that would result.
The Supreme Court cut through the reasoning of counsel for all parties and both lower courts, ruling that a decision could not turn on the applicability of the principle of equality and fairness because no such freestanding principle existed. Lord Carnwath stated that “[w]hatever the position in European law or under other constitutions or jurisdictions, the domestic law of this country does not recognise equal treatment as a distinct principle of administrative law”, and that “[s]ubstantive unfairness... is not a distinct legal remedy”.
Any shockwaves that Lord Carnwath’s statements might have made are dampened to some extent by the Court’s subsequent reasoning and examination of UK case law. It is clear that fairness and equality are accorded constitutional significance (they were described as fundamental principles of a democratic society), but that Lord Diplock’s tripartite categorisation of grounds for judicial review (illegality, irrationality and procedural impropriety) has been preserved.
The Court cited with approval Lord Hoffman’s finding in Matedeen v Pointu  1 AC 98 that “treating like cases alike and unlike cases differently is a general axiom of rational behaviour” but found that a court cannot strike down a measure simply because of inconsistency. Lord Sumption stated that “[t]he common law principle of equality is usually no more than a particular application of the ordinary requirement of rationality imposed on public authorities.”
The Court found that the conduct of the OFT in 2008 may have given rise to a legitimate expectation of equal treatment but a decision to frustrate that legitimate expectation could only be struck down if it was found to irrational.
Procedural unfairness was confirmed as a long established ground for judicial review, but it was also confirmed that a court could not strike down a measure simply because of substantive unfairness.
The unfairness and unequal treatment in this case was not sufficient to make the decision of the OFT irrational. The Court was content to find that the OFT had made a rational decision in repaying TM Retail in 2012, but not other parties, because of the position it found itself in having mistakenly made representations to TM Retail. TM Retail had sought and obtained an assurance which they claimed to have relied on, the other parties who had not obtained an assurance “knew what they were doing and accepted it with their eyes open”. The OFT could “reasonably take the view” that, if they did not honour their assurance to TM Retail, then TM Retail would have grounds for an out of time application to appeal to the Competition Appeals Tribunal. The other parties were not in that position, so it was open to the OFT to refuse to refuse to repay their penalties or contribute to their costs.
The findings of the Supreme Court in Gallaher show a desire to keep the principles of public law in the UK lean, and reveal another gap between UK and EU jurisprudence. Lord Sumption spoke of it being important not to unnecessarily multiply categories of grounds for judicial review because of the danger of undermining the coherence of the law. Whilst acknowledging that a principle of equal treatment existed in EU law the court were not willing to recognise its applicability or a comparable UK principle even in the field of competition law which has a European flavour to it.
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