Monday, 6 March 2017

Gone but not forgotten

Remember that court case Spark took last month, to put a delay on the proposed merger between Sky TV and Vodafone? Spark wanted the merger put on hold until the Commerce Commission's reasons for approving it were available, and Spark would have had an opportunity to see the reasoning and potentially appeal against it.

Spark won: the judgement is here, for competition law tragics, but in the event the whole thing became moot when the Commerce Commission declined to approve the merger.

Even so, the whole thing has left me thinking, and thinking in particular about the Commission's practice of issuing a decision first, and the full written reasons later. And while I didn't think it was odd at the time I was there, now I do.

For one thing, it doesn't fit with what other judicial bodies do, and normally the Commission tends to follow legal practice (in recent years, for example, it has adopted standard judicial citation style for its decisions). You don't get High Court decisions first, and reasons later: the judgement is the judgement is the judgement.

For another, there's an element of justice being seen to be done. Parties are entitled to know, at the time, why a decision went the way it did. The Commission likely feels that the gap in timing is kept as short as possible - in its latest Statement of Performance Expectations it aims for 10 business days - and so isn't such a big deal. But that really doesn't cut it: in principle, I'd now argue, decisions and reasons together are a fairer way to go, and in practice the gap causes real problems.

There's the one Spark identified: by the time Spark gets round to challenging the Commission's reasoning, it might be too late, and the omelette can't be unscrambled. And there's the opposite problem: merging parties left in limbo, when 10 days can be an eternity in the capital markets and the market for corporate control. Last month Kraft's US$143 billion hostile bid for Unilever was announced on a Friday, called off on a Sunday: while that deal was more high farce than high finance, the reality is that there can indeed be brief windows of opportunity that won't survive two weeks (or more) of swinging in the wind.

And finally I think that it might improve the Commission's own internal decision processes. "Here's the decision as it will look in the shop window" is a better document for Commissioners to sign off on than "Here's a likely decision. There'll be more supporting stuff later".

There are arguments both ways: some will see the trade-off of decision quicker, reasons later as a reasonable package, and indeed I used to, too. But having had a rethink, I now prefer make a decision and publish the reasons at the time. It avoids the vacuum problem that the Spark case pointed out, and I think it's a bit fairer to all parties involved.*

*In an earlier version I had said that "Anything else" - other than reasons at the time - "falls short", but that was too black and white. People (as I mention in a reply to a comment below) can reasonably put different priorities on tradeoffs between speed versus transparency.

2 comments:

  1. Your point is a valid one, but your comparison with the Court system is not entirely fair.

    First, the Courts do from time to time publish decisions with reasons to follow.It often happens during a trial. Outside of trial, its usual only where real urgency requires it. Its also not entirely unusual in urgent appeals, where the panel of judges has made up its mind and reasons follow later, when time permits.

    Second, as you'll be aware, the Commission does not have full control over merger deadlines, and will generally be pressured to make a decision as soon as possible. Time is critical in mergers. The Court on the other hand will take its sweet time - its not been unusual for the Court to sit on its decision for a year after the hearing was heard (two cases come to mind, Commerce Commission v Bay of Plenty Electricity - a s36 case heard in February and decided in December, and Powerco v Commerce Commission, a judicial review of a Part 4 decision, heard in in November and decided in December the following year).

    Finally, having said your point is valid, there is a competing tension. Every day is likely to be costing the applicant and target. Other players in the industry may keep plans on hold waiting to see if the merger proceeds. In light of that, is it right for the Commission to sit on a known decision, in order to prepare final written reasons?

    ReplyDelete
    Replies
    1. Thanks for the thoughtful comments, and I'd be the first to admit (though only narrowly ahead of the lawyers rushing to point it out!) that my grasp of legal process is far from complete. My impression, if that's all it is, is that most judgements came with their reasons, and I think there's a logic to that, but happy to accept that it's not universal.

      Just to be clear, I didn't suggest that the Commission was too slow in making decisions: given the complexity of the things that come in its door these days, it's generally (in my view) around what you'd expect. And I completely agree with you on the appalling slowness of the courts, and I can think of others - the one that looked most bizarre to me was '0867' where the technology being argued about was obsolete by the time the process finished.

      Your point about competing tensions is fair enough, too: I got a similar comment from someone else on Twitter, pointing to an inherent trade-off. Before the Spark case, I too took the view that early decision/later reasons was the better approach: now I'm more inclined to the package deal of both together. But people can reasonably disagree on the weights they put on competing criteria. 'Anything else falls short' in my original post was too strong: I'm about to revisit that.

      Delete