Jersey Competition Regulatory Authority - Annual Report 2008

JerseyCompetition RegulatoryAuthority

AnnualReport 2008

Contents

2. Foreword
3. Chairman'sStatement
4. ExecutiveDirector's Statement

6. About the JCRA

8. Board Members
9. Our Values
10. Our Performance in 2008

24. JCRAFinancial Statements 2008
25. Report and Financial Statements
26. Members' Report
27. Independent Auditors' Report

34. Corporate GovernanceGuidelines

Foreword

This is theeighth Annual Report of the Jersey CompetitionRegulatory Authority (JCRA).

TheJCRAisanindependentbody, establishedin JerseyCompetitionRegulatoryAuthority May2001 bytheStatesofJersey, withtheprimary 2nd Floor,SalisburyHouse,1-9 UnionStreet missionto promoteconsumerwelfarethrough StHelier,Jersey

competitionand measuresthatencouragelower ChannelIslands,JE23RF

pricesand greaterchoiceand innovationinthe Tel: +44 (0)1534 514990

goods and servicesavailableinJersey. Theworkof Fax: +44 (0)1534 514991 theJCRAisthusexpectedto contributeto Jersey's Email: enquiries@jcra.je long-termeconomicgrowth and competitiveness. Website:www.jcra.je

Thisreport ismadebytheJCRA.It ispresented to Allrightsreserved. theEconomic DevelopmentMinisterpursuant to

Article18 oftheCompetitionRegulatoryAuthority

(Jersey)Law 2001. Theaccounts oftheJCRAwith

respect to thefinancialyearending31 December

2008 areincludedinthisreport, fulfillingthe

requirementofArticle17 ofthesamelaw.Thisreport

also fulfilstherequirementsofArticle59 ofthe Telecommunications(Jersey)Law2002 andArticle

13 ofthePostalServices(Jersey)Law2004, each of whichrequiretheJCRAto publishanAnnualReport

inrespect ofeachfinancialyearsurveyingrelevant developmentsandreviewingcompetitionin, and restrictionson,thesupplyoftelecommunications

and postalservicesinJersey.

Chairman's Statement

This has been another busy year for the nine- member executive team at the JCRA.

Inthefieldoftelecomregulation,themostsatisfying Meanwhile,underthecompetitionlaw,wehave achievementhasbeentheimplementationofmobile continued ourcampaignagainsttheissuingoffixedor numberportabilityonDecember1st,2008.This recommendedpricesbyprofessionalandtrade schemepermitsusersto keeptheirexistingmobile associations,again,intheinterestsbothofenhancing phonenumberwhilechangingtheirlicensed service competitionandexpandingconsumerchoice.This provideratnoadditionalcharge.Theserviceis year,theJerseyCab DriversAssociationhasagreed availablethroughouttheChannelIslands,enhancing todesistfromsuchpractices.Wehavealso bothcompetitionandconsumerchoice.Earlier,in consideredthecompetitiveeffects,inavarietyof July,weinitiatedJersey'sMobileMastLocator markets,ofanumberofproposedmergers. website,enablingthepublicto identifyeachmaston

theisland, togetherwithanyavailabledataonitshigh Whencalled upon,wehaveadvised theStatesona frequencyemissions.InDecember,wealso numberofissues,mostnotablyontheeconomic introducedanew pricecontrolforJerseyTelecom's consequencesforJersey's retailsectorthatwould fixedlineretailtelecommunications,guaranteeingthat flow fromtheestablishment ofanothersupermarket anypricerisesfortheseserviceswillremainbelow ontheisland.

inflationforthecomingthreeyears.

Asimilar pricecontrolregimeforcorepostal services, which include locallettersandletterssent abroad, cameinto effectat thebeginning of 2008. During theyear, we alsoissuedlicences to two companieswhich providepostalservicesin competitionwith JerseyPost,andundertook a review of JerseyPost's servicestandards.

Attheendofahard-workingyearfortheJCRA,I shouldliketo expressmywarmestthanksto the ExecutiveDirectorand theothermembersofstaffand tomynon-executivecolleaguesontheBoard.

The Rt.Hon. the Lord Kingsland,QC Chairman

Executive Director's Statement

2008was ayear of results for theJCRA, results that produced real benefits for Jersey and its consumers.

Perhapsourhighestprofileoutcomewasthe implementationofmobilenumberportability(MNP)on 1December2008.MNPisaservicethatallows customerstokeeptheirentiremobilephonenumber whenchangingtheirmobilephoneserviceprovider. TheimplementationofMNPinJerseyisakeyfactor in promotingcompetitioninmobiletelecommunications aswellasconsumerchoice,andthereforehasbeena majorlong-standinggoaloftheJCRA.Jersey's incumbenttelecommunicationsprovider,Jersey Telecom(JT),initiallyopposed theintroductionofMNP inJerseyandfiledanappealagainstitinJersey's Royal Court,whichtheJCRAvigorouslyopposed.In February2008,however,wereachedanagreement withJTtoenditslegalchallengeandsupport the implementationofMNPthroughouttheChannel Islandsincooperationwiththeotheroperatorsand Guernsey'sOfficeofUtilityRegulation(OUR). Thereafter,theJCRAandOURworkedtogetherto overseeanintensiveandtechnicallyvigorous implementationprocess,whichculminated inthe successfullaunchofMNPinJerseyand Guernseyon 1December2008.Asaresult,now bothpre-paidand post-paid mobilecustomersinJerseyhavetheability tochangetheirmobileoperatorand keepthesame phonenumber,atnoadditionalcharge.

Whileamilestone,thesuccessfulimplementationof MNPwasnot theJCRA'sonlysignificant achievement intelecommunicationsregulationin2008.InJuly,for example,welaunchedJersey'sMobileMastLocator website.Thiswebsiteprovidesup-to-dateinformation onthelocationofmobilephonemastsinJersey throughaninteractivemap thatenablesusersto view thelocationofeachmastandavailabledataonany

highfrequencywirelessemissions.Thewebsitealso containsinformationonhow sitesaremonitored and currentinternationalstandardsonsafelevelsofmast emissions.Duringthe4thquarterof2008,theJCRA carriedout thefirstrandomindependent auditofmast emissions,and recentlyupdatedtheMobileMast Locatorwebsiteaccordinglybased onthedata collected.Finally,attheendof2008theJCRA finalised anewpricecontrolforJTcoveringcertain fixed-linetelecommunicationservices.Thiswillensure thatanypriceincreasesfortheservicescoveredwill remainbelow inflationoverthenextthreeyears.

TheJCRAalsoachieved significantresultsinpostal regulationin2008.Thestart of2008sawthecoming intoeffectofapricecontrolcoveringthecorepostal servicesofferedbyJerseyPost(JP),whichinclude locallettersand letterssent fromJerseyto addresses intheUK,Guernsey,and abroad. Similarto the JCRA'spricecontrolintelecommunications discussed above,thispostalpricecontrolrequires thatanypriceincreasesfortheseand otherservices remainbelow Jersey's rateofinflationoverthenext threeyears.Laterin2008,theJCRAissuedthefirst twopostallicencesto companiesthat providepostal servicesincompetitionwithJP,andwecontinueto examinethescopeforadditionalentryand competitionintheprovisionofpostalservicesin Jersey.Inaddition,during2008theJCRA commenced amajorreviewofJP'squalityofservice standards,amajoroutcomeofwhichlikelywillbethe introductionbyJPofacompensationschemeforlost anddamagedmail,startingin2009.

Last yearalsosawtheJCRAtakeimportantsteps underJersey's CompetitionLaw.AJCRA investigationofcoaldistributionresultedinJersey's two largestcoaldistributorsagreeingto aCodeof Practice,whichisintendedto endpracticessuchas pricesignallingandrecommendingresalepricesthat hadtheeffect ofinhibitingcompetitionandconsumer choice.Furthermore,alsoinresponseto aJCRA investigation,theJerseyCabDriversAssociation agreedto enditslong-standingpracticeof recommendingfaresto operatorsofrestrictedtaxi- cabs.Thisrepresentsthelatestinaseriesofresults theJCRAhasachievedundertheCompetitionLawto eliminatefixedorrecommendedpricesamongtrade andprofessionalassociationsinJersey,including amongdentists,drivinginstructors,building contractors,plumbers,electricians,lawyersandnow restrictedtaxi-cabdrivers.

Suchactionsproducedirectconsumerbenefitsby facilitatinggreaterchoiceandcompetition.These effectswereindicatedbyaJCRAstudyreleasedin September2008.Amongthecasesexaminedinthis studywastheeliminationinlate2005oftheformerly fixedfeefortheprovisionofconveyancingservicesin Jersey.Thisresulted inthedevelopment ofamuch morecompetitivemarketplacefortheprovisionof conveyancingservicesinJersey,withoverall significantlyreducedfees.Thestudyestimatesthat, asaresult,consumersinJerseyhavesavedan aggregateofapproximately£2millionperyear,or approximately£5.5millionintotal,sincethestartof 2006.Thesewerepartoftotalconsumersavingsof approximately£12.5millionthestudyestimateshave arisenfromselect pastJCRAenforcementactions.

Resultssuchasthesecontributeto Jersey'soverall long-termgrowthand competitiveness.

TheJCRAcontinuestobeacentreofexcellencein Jerseyineconomicsand regulation,aswellasaworld leaderintheapplicationofcompetitionlawinsmall economies.In2008wewerecalledupontoadvisethe StatesofJerseyonmanyimportant issues,suchas theeconomicimpact ofnewentryintoJersey'sretail sectorbyalargesupermarket competitor.Wealso provided"plainEnglish" informationandguidanceto businessesandconsumersinJerseyoncurrent issues arisingunderthelawsweenforce.Internationally,we continued toworkthroughforumssuchasthe InternationalCompetitionNetworktoensurethatour ownpoliciesandproceduresreflect internationalbest practices,and toadvocatethatthebestpracticesthat aredevelopedtakeaccount oftheunique circumstancesthatoftenexistinsmalleconomies.

Ourachievementsin2008arisefromthehardworkof theJCRA'sstaffandBoardofDirectors,to whomI givemysincerestappreciation.ThisAnnualReport providesgreaterdetailontheseand other accomplishments,aswellasontheJCRA's operationsingeneral.Forevenmoredetailed informationontheJCRAanditsactivities,pleasevisit ourwebsite,www.jcra.je.

Charles Webb ExecutiveDirector

About the JCRA

What is the JCRA?

TheJCRAwassetup bytheStatesofJerseyin2001 asan independentbody,accountableto theEconomicDevelopment Committee(whosefunctionshavenow beentransferredto the Economic Development Minister)withexpertiseinpromoting competitionand consumerintereststhrougheconomicregulationand competitionlaw.

Why Competition?

TheJCRAaimsto facilitatecompetitionto benefitconsumersand the Jerseyeconomy. Facilitatingcompetitionwillhelpto improveoverall economic welfareand growth inJersey,andcontributeto thequalityof lifeofJersey's citizens.

Our Functions

Competition TheJCRAisresponsibleforadministeringand

enforcing theCompetition(Jersey)Law2005. Theaim ofthisLawisto preventconsumersbeing harmed byanti-competitiveorexploitativebehaviour inthemarket, suchasprice-fixing orabuseof marketpower.

Advisory

Wecanbecalledonto advisetheEconomic Development Ministeronmattersofeconomic regulationandcompetition.Forexample,in2008 weadvisedontheeconomic impact ofnew entryinto Jersey's retailsectorbyalargesupermarket competitor.

thesesectors.TheJCRAwasgiventhetaskupon incorporationofensuring that theseorganisations continueto satisfyallcurrent and prospective demands forservices,whilepromoting competition whereappropriate. Thisisachieved primarilythrough theconditionsofthelicencesgranted to Jersey Telecom and JerseyPost, whichtheJCRAhasa statutoryresponsibilityto enforce.

Who we are

TheJCRAismanagedbyaBoardconsistingofa Non-ExecutiveChairman,anExecutiveDirectorand threeNon-ExecutiveDirectors.Itsstaffcomplement comprisesthreecaseofficers,onejuniorcaseofficer,a legaladviser,aneconomicadviser,afinance& operationsmanagerandapersonalassistant.

Economic Regulation

Incommonwith manyjurisdictionsintheEuropean Unionand furtherafield,theStatesofJerseyhas decidedto structurecertainbusinessespreviously carriedonbytheStatesasseparatecompanies, albeitwholly-owned bytheStates.InJersey's case thisdecisionwastakeninrespectofthe telecommunicationsandpostalbusinesses,now run byJerseyTelecom LimitedandJerseyPostLimited, respectively. TheStatesalsodecided to withdraw, uponincorporation,thestatutorymonopolieswhich JerseyTelecom andJerseyPosthad previously enjoyed,to allow forthepossibilityofcompetitionin

Board Members

1 The Rt. Hon. the Lord Kingsland, QC Chairman

The Rt. Hon. the Lord Kingsland, QC, was appointed Chairman of the JCRAin July 2004 and was re-appointed in July2007. He was Shadow Lord Chancellorfrom 1997 to 2007. He is a Recorder and a Deputy High Court Judge and is a practisingbarrister, with an extensiveknowledge of competitionlaw. He was appointed Queen's Counselin 1988, a Knight Bachelor in 1990, and Privy Counsellor in 1994, the same yearthat he received hispeerage.

2 Charles Webb ExecutiveDirector

CharlesWebb was appointed as the JCRA's Executive Director in October 2007, havingpreviouslyserved as the Authority's in-house LegalAdviser since May2005. Before joiningthe JCRA, Charleshad spent the previous sevenyearsas an attorneyin private practice specialising in competition law and other complex regulatory matters. Charlesis an internationallypublishedauthor and speaker on competition law issues,both in general and specificallyconcerningthe application of competition law and policy in smallmarket economies.

3 Christopher Bright Non-Executive Director

Chris Bright was appointed a Non-Executive Director of the JCRA in August 2004 and was re-appointed in August 2007. He is a solicitorin privatepractice, specialisingin competition and regulation, as wellas an accredited mediator. He is a member of the UK Competition Commission, a member of the Disciplinary Tribunal of the Accountancy Investigation and DisciplineBoard in the UK and a Visiting Fellowat the Institute of Europeanand Comparative Law, Universityof Oxford.

4 Robert Foster Non-ExecutiveDirector

Robert Foster was appointed a Non-Executive Director of the JCRA in August 2004 and was re-appointed in August 2007. He is a

Commissionerof the NationalLottery Commission, and Chair of the 1 project Board overseeingthe introduction of the next operator licence.

He is also a Non-ExecutiveDirector, and Vice-Chair, of King's College HospitalNHS Trustin London, and a member of the Advisory Council

of a venture capitalcompany, Oxford Capital Partners. He was Chief Executiveof the UK CompetitionCommissionfrom 2000 to 2004. He

is a Chartered Engineerand was previouslyan engineering manager in

the electronics and telecommunications industries,thena senior civil servant in the Cabinet Officeand Department of Trade and Industry responsiblefor innovationpolicy.

2 3 5 Richard Povey Non-ExecutiveDirector

Richard Povey was appointed a Non-ExecutiveDirector of the JCRA in

May2005 and was re-appointed in May 2008. He hasextensive

industrial experience,particularlyin the petrochemical,mechanicaland

electrical engineering, and telecommunications sectors. He held a

number of senior management positionsin SwirePacific Ltd in Hong

Kong and Taiwan between1979 and 1996. Since 1996, he hasheld

non-executive positions for variousfund management and industrial

companies. He is currentlya Non-Executive Director of Opsec Security

Group plc and HendersonFar EastIncome Ltd.

4 5

Our Values

Webelieveit is important for anyorganisation to haveaset of values to guide its work. TheJCRAis no exception. Such values help enable the businesses, consumers and others we dealwith to know what to expect of us, and our Board and staff to act in aconsistent and fair manner. Ourvaluesencompass:

Fairness

The JCRAhas to be fairand objective.Weare committed to ensuringthat Jersey consumers and businessesunderstandour processes and how the JCRAgoes about its business.We intendto listen to allrelevantviews of consumers, businesses,and allpartieswho wishto be heard.

Proportionality

Our actions will be proportionate to the problems we seek to remedy.

Efficiency

Our resources will be tightly managed and we will aim for maximum efficiency in our operations.

Accountability

We are accountable to Jerseycitizens throughtheir political representatives,namelythe Economic Development Ministerand hiscolleagues, and through thelegalframework.TheMinistercan issue directionsand guidanceto the JCRAintelecoms and postal matters. We havea ServiceLevel Agreement with theMinister,regulatingthe grantfundingfor the administration of the Competition (Jersey)Law 2005.

Our Performance in 2008

In 2008,wehad five main aims. Thefirst three of these concerned the administration and enforcement of,respectively,theCompetition (Jersey)Law 2005,the Telecommunications (Jersey)Law 2002and the Postal Services (Jersey) Law 2004.Thelast two relate to advising on competition and regulatory matters and implementing our core values.

Aim 1

The Administration and Enforcement of the Competition (Jersey) Law 2005.

In 2008, the JCRAcontinued in its role as the primaryenforcerof Jersey's competition law, the Competition (Jersey)Law 2005 (theLaw).

Objective

Pursue suspected or potential infringements of the Law following complaints, or on own initiative.

Performance

We investigated an alleged price fixing among restricted taxi-cabs in Jersey. This investigation led to a voluntary decision by the JerseyCab Drivers Association to eliminate its practice of recommending fares. This represents the latest outcome in a series of JCRA investigations that have resulted in the elimination of fixed or recommended prices among trade and professional associations in Jersey. These actions facilitate price competition and consumer choice.

In response to a JCRAinvestigation, Jersey's two largest distributors of coal products agreedto an Industry Code of Practice issued by the JCRA. Under this Code, the distributors committed to cease issuing recommended retail prices and cease disclosing future retailprices. TheCode is intended to facilitate increased competition for the sale of coal products in Jersey.

Performance(continued)

Wefined TUIAG£10,000 for failing to complywith theLaw's requirements concerning mergersand acquisitionsrelating to its acquisition of First Choice Holidays plc.

In all, three investigations were opened during the year, of which two were completed, and one still active at the year end (it was completed in January 2009). Of the three investigations which were active at the start of the year,two were completed during 2008.

Objective

Dealwith applications for exemption of potentially anti-competitive agreements.

Objective

Dealwith requests for guidanceon possible anti- competitive arrangements/abuse of dominant position.

Performance

We dealt with one application for exemption in 2008; however, this application was subsequently withdrawn by the parties.

Performance

The JCRA responded to severalinformal requests for guidance from private parties in 2008. The details of these requests are confidential. No formal requests for statutory guidance were received.

Objective Performance

Deal with applications for approval of mergersand Thirteen mergers or acquisitions were notified to acquisitions. the JCRAfor approval in 2008. Of these,the JCRA

approved twelve matters unconditionally and one matter was approved subject to conditions.

The average time it took the JCRAto complete its analysis of non-complex mergersand issue an unconditional approval decision was twenty-four days. The one complex case, requiring a conditional JCRAapproval decision, took five months to complete. These time-frames are in accordance with our published target time-frames for merger review (i.e., one month for non-complex cases and up to six months for complex cases), which reflect international best practice.

The conditional mergerapprovalinvolved the JCRA's review of a proposed acquisition by Jersey's largest potato grower of one of Jersey's largest distributors of tractors and agricultural machinery. TheJCRAmandated conditions to its approval to avoid this acquisition resulting in a substantial lessening of competition in Jersey.

Objective Performance

Promote understanding by consumers and We published a final guideline on the application of businesses of the Law. the Competition Law to vertical agreements.

We worked in cooperation with other local organisations such as the Jersey Consumer Council and the Jersey Chamber of Commerce to publish practical advice to consumers and businesses on Competition Law enforcement.

We were asked to provide presentations in Jersey on the Competition Law to organisations such as the Institute of Directors.

Objective

Assess whether appropriate reformscan be made to the Law.

Objective

Facilitate the development of competition law and policy in small jurisdictions.

Performance

We conducted internalresearchon mergerand application thresholds in preparation for a public consultation on potential changesto the thresholds applicable in Jersey, which we plan to undertake in 2009.

Performance

Working through the International Competition Network, we ensured that Recommended Practices on the Assessment of Dominance/Substantial Market Power contained specific guidance on the assessment of dominance in smalland/or isolated economies.

Our Performance in 2008

In 2008, we continued our role as the regulator of Jersey's telecommunications sector, taking steps to promote the interests of consumers in terms of quality, value for money and choice.

Aim 2

The Administration and Enforcement of the Telecommunications (Jersey) Law 2002.

In2008, we continuedour roleas the regulatorof Jersey'stelecommunications sector, taking steps to promote the interests of consumers in terms of quality, value for moneyand choice.

Objective

Facilitate new entry into telecommunications markets in Jersey.

Objective

Ensure fixed and mobile interconnection between operators.

Objective

Facilitate competition and user choice in mobile telephony by introducing Mobile Number Portability (MNP).

Performance

We issued a telecommunications licence to a new entrant, MRS Communications Limited.

Performance

We considered various questions concerning interconnection raised by licensed operators.

Performance

In February we reached an agreementwith JT and the other operators on the implementation of MNP in Jersey and Guernsey. We thereafter worked closely with the operatorsand in cooperation with the Office of Utility Regulation in Guernsey on MNP implementation. As a result of these efforts, MNP was launched in Jersey on 1 December 2008.

Objective

Investigate practices by operators which restrict competition or otherwisebreach their licence obligations, and take effectiveremedial action.

Objective

Ensure JT publishes separated accounts for each of its businesses.

Objective

Review wholesale access issues and consider whether regulatory interventionis appropriate.

Objective

Review appropriatenessof price caps on JT's fixed and mobile services.

Objective

Implement direction on mobile mast monitoring.

Performance

We investigated severalpotentiallicence infringements in 2008. These were either resolved informally or did not otherwise warrant the issuance of Initial or Final Notices under Jersey's Telecommunications Law.

Performance

We reviewed JT's separated accounts submitted in July. Consideration of JT publishing separated accounts was deferreddue to other priorities.

Performance

In December, we issued an invitation to tender concerning a major review of JT's wholesale access provision and separatedaccounts methodology we plan to undertake in 2009.

Performance

In October, we issued a new price control on certain fixed-line retail services offered by JT.

Performance

In Julywe implemented the JerseyMobileMast Locator interactive website, and at the end of 2008 conducted the first random independent audit of mast emissions.

Our Performance in 2008

In 2008, we continued our role as the regulator of Jersey's postal sector, taking steps to promote the interests of consumers in terms of quality, value for money and choice.

Aim 3

The Administration and Enforcement of the Postal Services (Jersey) Law 2004.

In 2008, we continued our role as the regulatorof Jersey's postal sector, taking steps to promote the interests of consumers in terms of quality, valuefor money and choice.

Objective

Assess the scope for introducing competition in postal services, to the extent consistent with the considerations set out in the Postal Law.

Objective

Investigate practices by operators which restrict competition or otherwise breach their licence obligations, and take effective remedialaction.

Performance

In June, we issued a licence to provide postal services in Jersey to RegencyHoldings Limited. In December, we issued a postal licence to another operator in Jersey, Hi-Speed Freight Services Limited. These are the first two licences the JCRA has issued under the Postal Law to companies that provide postal services in competition with Jersey Post (JP).

Performance

We investigated severalpotential licence infringements in 2008. These were either resolved informally or did not otherwise warrant the issuance of Initial or Final Notices under Jersey's Postal Law.

Objective

Assess cost of JP's UniversalService Obligation (USO).

Objective

Review the scope of the USO.

Objective

Review JP's quality of service.

Objective

Monitor JP's price control.

Performance

We worked closelywith JP and its consultants to assess the cost of the USO in Jersey.

Performance

Assessment of the scope of the USOwas deferred due to other priorities.

Performance

In June, the JCRAissued a public consultation on JP's quality of service standards. Themain outcome of this likelywill be the introduction by JP of a compensation scheme for lost and damaged mail, starting in 2009.

Performance

A price control on JP's core postal servicestook effect on 1 January2008 and the JCRAthereafter has worked cooperatively with JP to ensure compliance.

Our Performance in 2008

As in previous years, in 2008, we were often asked to provide advice, either formally or informally,

to the States of Jersey on various proposals or potential legislation and regulations.

Aim 4

Advising the States on competition and regulatory matters.

Asin previous years,in2008, we wereoftenaskedto provideadvice,eitherformallyor informally, to the Statesof Jersey on various proposalsor potentiallegislationand regulations.

Objective

Monitor proposed States legislation and review existing States legislation for potential effects on competition and advise relevant Minister.

Objective

Advising the Economic Development Minister on competition/regulatory matters.

Performance

Weadvised on numerous potentialpolicies, initiatives, and legislative proposalsin 2008.

Performance

We provided advice to the Economic Development Minister on the economic impact of new entry into Jersey's retailsector by a large supermarket competitor. The advice concluded that new entry would be economically beneficial to Jersey.

Objective Performance

Provide advice and assistanceto other States We appeared before the Economic Affairs Scrutiny Departments, States Members,and ScrutinyPanels. Panel concerning the proposal to privatise Jersey

Telecom. We also appearedbefore the Corporate Services Scrutiny Panel concerning its review of the proposed importation of bovine semen.

Our Performance in 2008

Our core values include transparency and proportionality. In 2008, we continued our efforts to put these core values into practice.

Aim 5

Implementing our core values.

Our core values include transparency and proportionality.In 2008, we continued our efforts to put these core values into practice.

Objective Performance

Implement transparencyin our operations. We published a draft of our 2009 Aims and

Objectives for consultation.

Where possible, we aim to consult publicly before finalising our positions. For example, our Direction on Jersey Telecom's price control was issued following an extensive consultation process.

Objective Performance

Putting proportionalityinto practice. In our dealings with businesses, we strive to

resolve compliance issues where possible through discussions rather than formal enforcement action. An example of this in 2008 was the resolution of potential competition concerns in Jersey's coal distribution industry through the voluntary adoption of a Code of Practice, in lieu of formal enforcement action.

Assessing the Economic Effects of Competition Policy in Jersey

In September 2008 the JCRA published a study that measured some of the economic effects arising from competition policy in Jersey.

Thestudyestimated totalconsumersavingsof approximately£12.5 millionarising directlyfrom selected past JCRAenforcementactions. These actions includetheelimination of theformerlyfixed feefor theprovisionof legalconveyancing services and theopeningup of Jersey's telecommunication services to competition. Thestudy's estimatesof consumer savings areconservativeandbased on thebest availabledata.Manyof theestimated savings arestructuraland thebeneficialeffects are thereforeexpected to continue.

Inadditionto estimatingdirectconsumersavings arising from specific enforcementactions, thestudy also examinesotherbenefits arising from competition policy in Jersey.Oneof theseis the deterrenceof anticompetitiveconduct. Thestudy discusses direct evidence of onecartel, andone anticompetitivemerger,whichdid not proceed based on theJCRA'sadvice. Additionalexamples of deterrencelikelyexist, but haveneverbeenbrought to ourattention. Thestudyalso examineswider benefits arising fromcompetition policy in theform of increasesin efficiency,productivityand innovation, as companiesareforced to work harder to retain theircustomersin competitivemarkets. Thesebenefits contribute to Jersey's overallong- term growth andcompetitiveness, althoughthey aregenerallyseenasunquantifiable.

JCRA Financial Statements 2008

Consistentwithprioryears,theJCRAmadean accountingsurplusof£1 in2008 –effectively, break even. Dueto thelawsuponwhichtheJCRAis based, itmayonlyaccountforincomeinorderto meetitsactualcostsduringtheyear.It must also ensurethatit receivesenoughincomeduringthe yearineach ofthethreeareasitcovers– competition,telecomsregulationand postal regulation–to fundthemseparatelygiventhatcross- subsidisationisnot permitted. Aworking balanceis maintainedatalltimes,but forthepurposesofthe financialstatements,deferredincomeadjustments aremadeto match incomewithcosts.

Overall,theJCRAincurredlowercosts in 2008 than theprevious two years.This wasdueto various reasons, not least being thefact thatconsiderable legalfees wereincurredin2007 in defending the decision to implementMobileNumberPortability (MNP).Acrosstheboard, most othercosts were fairlyconsistent with theprior year.Consultancy feesincreased, however,mainlydueto work on the JerseyPost (JP)USOcosting project, MNP,Jersey Telecom pricecontrolproject and theaudit of mobilemast emissions. Depreciation increased asa result of thenew computerequipment being purchased inthelatterhalfof 2007, and web design costs increased withtheintroduction of theMobile Mast Locator site.

Itshould benoted that theJCRAmaintains strict internalguidelines withregardto purchasing and tendering procedures,whichcombinedwith corporate governance in linewith best practice, ensures that theAuthorityisrunasaneffectiveand efficient organisation. Anaudit of policiesand proceduresisundertakeneachyearby independent internalauditors to ensurehigh standards aremaintained.

Theintroduction of GSTinJerseyin2008 had a minimalimpact on theJCRA.AlthoughtheJCRA had to registerwith thetaxauthorities, no GSTis chargeableon theinvoicesit submits to the licensed operatorsandEDD. However, GSTpaid on supplies and servicesisableto bereclaimed in full.

Inlinewith theService LevelAgreementbetween theJCRAand theEconomic Development Department (EDD),grantfunding for the Competition Lawcontinuedto bereceived quarterly inadvance.Therewasdeferredgrant income carried forward at theyearend in thesumof £274,761 (2007: £192,744).This deferredincome will, at EDD's option, eitherbepaid back to EDDor carried forward to offset funding in 2009. Incomeof £62,956 (2007: £56,058)wasreceived in theform of mergersand acquisitions fees. Twofinesof £10,000 eachwerereceivedduring theyearin relation to thenon-filing of acquisitions, onerelating to adecision in2007. Althoughthesewerepaid to theJCRA,under theLaw thesewerethenpaid on to EDDand werethereforenot accounted for within theincomeand expenditureaccount, astheJCRA merelyacted asacollection agent.

Deferred 2008 telecommunicationslicence fee incomecarried forwardwas£132,280 (2007: £85,045).Basedon budgeted costs, which include thereview of JT's wholesaleaccess provision and separated accounts methodology, theClass IIIand Class IIlicencefeesfor2009 haveonceagain been set at 0.75% of regulated turnover,subject to subsequent adjustment in thelight of actualcosts.

Class IIpostallicence feesfromJPcontinuedto be received quarterlyinadvanceandat theyearend therewas deferredpostallicencefeeincomeof £48,106 (2007: £85,268).

Report and Financial Statements

For the year ended 31December 2008

Jersey Competition Regulatory Authority (Incorporated in Jersey, Channel Islands)

Members

TheRt. Hon. the Lord Kingsland,QC (Chairman) Charles Webb (ExecutiveDirector)

Christopher Bright (Non-ExecutiveDirector) Robert Foster (Non-Executive Director) Richard Povey (Non-ExecutiveDirector)

Secretary PaulO'Toole

Bankers

HSBC

PO Box 14

St Helier, Jersey JE4 8NJ

Registered Office

Jersey Competition Regulatory Authority 2nd Floor, Salisbury House

1-9 Union Street

St Helier, Jersey JE2 3RF

Auditors

Reads (Audit) Limited PO Box 179

40 Esplanade

St Helier, Jersey JE4 9RJ

Members' Report

The Members of the Authority present their report and financial statements for the year ended 31 December 2008.

Activities

The principalactivitiesof the Authority during the year were the regulation of the telecommunications and postal industriesand the administration and enforcement of the Competition (Jersey)Law 2005.

Results

There was a surplus for the yearof £1 (2007: surplus £1).

Members

The Members in office when these financial statements were approved areshown on page 25.

Auditors

The auditors, RSM Robson Rhodes (Jersey)Limited resigned on 25 July2008 and Reads (Audit)Limited wereappointed in their placeon the samedate.

By order of the Members

Paul O'Toole Secretary

Statement of Members' responsibilities in respect of the financial statements

TheCompetition RegulatoryAuthority (Jersey)Law 2001 requires the Members to preparefinancial statements which shall be in accordance with generally accepted accounting principles and show a true and fairview of the surplus or deficit of the Authority for the yearand of the state of the Authority's affairs at the end of the year.

In preparing financial statements the Members should:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• prepare the financialstatements on the going concern basis unless it is inappropriate to presume that the Authority will continue in business;

• state whether applicable accounting standards have been followed, subject to anymaterial departures disclosed and explained in the financial statements.

TheMembers areresponsible for keeping accounting records which are sufficient to show and explain the Authority's transactions and are such as to disclose with reasonable accuracy, at any time, the financialposition of the Authority and to enable them to ensure that the financial statements comply with the Law. Theyarealso responsible for safeguarding the assets of the Authority and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

TheMembers confirm that these financial statements comply with theserequirements.

Independent Auditors' Report

Wehaveaudited the Authority's financial statements for theyear ended 31December 2008, on pages 28to 33.These financial statements have been prepared on the basis of the accounting policies set out therein.

This report is made solelyto the Authority's Members, as a body in accordance with Article17 of the Competition RegulatoryAuthority (Jersey) Law 2001. Our audit work has been undertaken so that we might state to the Authority's Members those matters we arerequiredto state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibilityto anyone other than the Authority and the Authority'sMembersas a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Members and auditors

AsdescribedintheStatementofMembers' Responsibilities,theAuthority'sMembersare responsibleforthepreparationofthefinancial statements inaccordancewithapplicableJerseylaw.

Ourresponsibilityisto auditthefinancialstatements inaccordancewithrelevantlegaland regulatory requirementsandInternationalStandards on Auditing(UKandIreland).

Wereport to yououropinionasto whetherthe financialstatements,whichhavebeenpreparedin accordancewithUnitedKingdom accounting standards,giveatrueandfairview.Wealsoreport to youif,inouropinion,theAuthorityhasnotkept proper accountingrecordsorifwehavenotreceived allthe informationandexplanationswerequireforouraudit.

Weread otherinformationcontainedintheAnnual Reportandconsiderwhetheritisconsistentwiththe audited financialstatements.Theotherinformation comprisestheChairman'sStatement,theExecutive Director'sStatement,thegeneralcommentaryandthe commentaryontheannualfinancialstatements.We considertheimplicationsforourreport ifwebecome awareofanyapparentmisstatementsormaterial inconsistencieswiththefinancialstatements.Our responsibilitiesdonotextendtoanyotherinformation.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Members in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Authority's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessaryin order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion the financial statements give a true and fair view of the state of affairs of the Authority as at 31 December 2008 and of its surplus for the year then ended.

Reads (Audit) Limited Jersey, ChannelIslands

25 February 2009

Balance Sheet

As at 31 December 2008 Notes 2008 2007

£ £

Fixed Assets

Tangiblefixed assets 3 73,062 103,389 Current Assets

Debtors and prepayments 4 56,635 50,154 Cash at bank 549,329 509,900

605,964 560,054 Current Liabilities

Creditors: amounts falling due withinoneyear 5 553,579 537,997

Net CurrentAssets 52,385 22,057 Total Assets Less Current Liabilities 125,447 125,446

Retained Surplus 6 125,447 125,446

For and on behalf of the Members:CharlesWebb 23 February 2009

Income and Expenditure Account

For the year ended 31 December 2008 Notes 2008 2007

£ £

Income

Licencefees 658,135 717,343 Economic Development Departmentgrant 412,983 407,216 Bankinterest 19,647 19,078 Mergers and acquisitions fees 62,956 56,058 Application fees 500 500 Sundryincome - 1,003 1,154,221 1,201,198

Expenditure

Salariesand staff costs 777,525 781,005 Consultancyfees 114,241 44,175 Operatingleaserentals 62,866 63,338 Traveland entertainment 5,439 9,028 Conference and course fees 22,000 23,316 Depreciation 33,169 20,741 Administration expenses 19,785 22,174 Legaland professionalfees 17,618 123,344 Generalexpenses 35,886 35,844 Audit and accounting fee 15,396 15,963 Advertising andpublicity 5,396 5,305 Repairsandmaintenance 16,656 25,360 Heat, light and water 4,906 3,085 Recruitment 18,858 25,953 Loss on disposal of fixed assets - 591 Internet web page design 4,479 1,975

1,154,220 1,201,197 Surplus for the year 6 1 1

Recognised gains and losses

There are no recognisedgainsand lossesotherthanthe surplusesof the Authorityof £1 inthe yearsended 31 December 2008 and 31 December2007.

Cash Flow Statement

For the year ended 31 December 2008 Notes 2008 2007

£ £

Net cash inflow from operating activities 8 22,624 59,838 –––––––––––– –––––––––––

Returns on investment and servicing of finance

Interest received 19,647 19,078 Capital expenditure and financial investment

Payments to acquire tangiblefixed assets (2,842) (91,550)

Managementof liquid resources - (100,000)

–––––––––––– –––––––––––– Increase/(Decrease) in cash 39,429 (112,634)

Reconciliation of net cash flow to movement in net funds

For the year ended 31 December 2008 2008 2007

£ £

Increase/(Decrease)incashinyear 39,429 (112,634) Cash used to increase liquid resources - 100,000

Change innet funds 39,429 (12,634) Net funds at 1 January 509,900 522,534 Net funds at 31 December 549,329 509,900

Analysis of net funds

1 Jan 2008 Cash flows 31 Dec 2008

Cash at bank 59,900 39,429 99,329 Currentassetinvestments 450,000 - 450,000

Total 509,900 39,429 549,329

Notes

1. Incorporation

The Authority was incorporated in Jersey on 1 May 2001 as a body corporateunder the terms of the Competition Regulatory Authority(Jersey)Law 2001.

2. Accounting policies

Accounting principles

Thefinancial statements areprepared under the historical cost conventionand in accordance with accounting principles generaly accepted in the Island of Jersey, incorporatingUnited Kingdom accounting standards.

Interest receivable

Interest on bank depositsisaccrued on a dailybasis.

Fixed assets

Allfixed assets are initiallyrecorded at cost.

Depreciation

Depreciation is provided on all tangible fixed assets, at rates calculated to write off the cost overtheir estimated useful livesin equal instalments. The depreciation rates used areas follows:

Leasehold improvements – remaining lease term Computer equipment – 33% per annum Fixtures and fittings – 10% per annum Otherequipment – 20% per annum

Leasing commitments

Rentals payable under operating leases are charged in the income and expenditure account on a straight line basis overthe lease term.

Pensions

The Authority providesa defined contribution pension scheme. Contributions are charged in the income and expenditureaccount as theybecome payablein accordancewith the rulesof the scheme.

Telecoms licence fees to Class II and Class III Operators

Licence fees areset on the basis of cost recovery under Article 17 of the Telecommunications (Jersey) Law 2002. TheAuthority's costs aredetermined on an annual basis and thesearerecovered by applying a percentage to the licensed revenues of the Operators on the basis of relevantpro-rata turnover, or if appropriate an annual fee.

The percentage for 2008 was 0.75% (2007: 0.75%).

The Operators areinvoiced quarterlyin advance and fee income is recognisedwhen invoiced. Should fee income exceed costs, the balance is treated as deferred revenue. Deferred licence feeincome as at 31 December 2008 amounted to £132,280 (2007: £85,045).

Postal licence fees to Class II Operators Licence fees areset on the basis of cost recovery under Article 18 of the Postal Services (Jersey)Law 2004. The Authority's costs are determined on an annual basisand these arerecoveredby applying a percentage to the licensed revenuesof the Operators on the basis of relevant pro-rata turnover, or if appropriate an annual fee.

The fee for 2008 was set at £225,000 (2007: £300,000).

The Operators are invoiced quarterly in advance and fee income is recognised when invoiced. Should feeincome exceedcosts, the balance is treated as deferred revenue.Deferred licence fee income as at 31 December 2008 amounted to £48,106 (2007: £85,268).

Grants

Grants and income receivedfrom the Economic Development Minister arerecognised on receipt of the funds. Anyunusedfunds at the financialyear end areeither deferredor repaidto the Minister. Deferred grant income as at 31 December2008 amounted to £274,761 (2007:£192,744).

Notes

3.Tangiblefixed assets Leasehold Computer Fixtures Other Total improvements equipment and fittings equipment assets

£ £ £ £ £

4. Debtors and prepayments 2008 2007

£ £

Prepayments 46,488 25,723 Tradedebtors 9,209 18,957 Sundrydebtors 938 5,474 56,635 50,154

5. Creditors: amounts falling due within one year 2008 2007

£ £

Accruals 66,389 67,003 Deferred grantincome 274,761 192,744 Deferred licencefeeincome 186,803 176,812 Other deferredincome - 1,250 Tradecreditors 15,556 90,574 Socialsecurity 10,070 9,614 553,579 537,997

6. Movement on retained surplus Income and Expenditure Account £

At 1 January2008 125,446 Surplus for the year 1

At 31 December 2008 125,447

7. Taxation

Article 16 of the Competition Regulatory Authority (Jersey)Law 2001 providesthat the income of the Authority shall not be liableto income tax under the Income Tax(Jersey)Law 1961.

Notes

8. Note to the cash flow statement

Reconciliation of surplusfor the year to net cash inflowfrom operating activities:

2008 2007

£ £

Operatingsurplus 1 1 Depreciation 33,169 20,741 Interest on currentassetinvestments (19,647) (19,078) Loss on disposalof fixedassets - 591 (Increase)/decreaseindebtors (6,481) 17,528 Increasein creditors 15,582 40,055

Net cash inflow from operating activities 22,624 59,838

9. Related parties

The transacting parties are:

- The Economic Development Minister

- Jersey Competition RegulatoryAuthority (JCRA)

Relationship

The JCRAacts independentlyof the States, but is accountable to the Economic Development Minister in respect of its fundingfor the CompetitionLaw which is also coveredby a ServiceLevel Agreement. The Minister acts as a conduit for requests from other Ministers who mayrequire the JCRA to carry out projects. The JCRAreports formallyto the Minister on an annualbasis.

Transactions

In2008 the Economic Development Minister provided funds to the JCRAin order that work on the Competition Law could be carriedout.

Amounts involved

• £192,744 brought forward as deferred grant income, as agreed from 2007.

• £480,000 receivedduring theyear under the Competition (Jersey)Law 2005 grant.

• £15,000 received inrespect of advicegiven to the Ministeroncompetitionmatters.

Amounts due to the Economic Development Department at the balance sheet date

2008 2007

£ £

Deferred grantincome (includedincreditors) 274,761 192,744

10. Financial commitments

At 31 December 2008 the Authorityhad annualcommitments under non-cancellableoperatingleasesas set

out below: Land and buildings

2008 2007

£ £

Operatingleaseswhich expire:

Not later thanoneyear - 6,745 Inmore thanoneyearbut lessthanfive years - - Later thanfive years 53,886 42,108 53,886 48,853

TheAuthority entered into a new nineyearleasefrom 21 June2007 which included aninitialninemonth rent freeperiod.

11. Pension commitments

TheAuthority providesa definedcontributionpensionscheme for its Executive Director and employees.The assets of the schemeareheldseparatelyfrom thoseof the Authorityinanindependentlyadministered fund. Contributionsof £102,946 (2007: £104,895)were charged inthe year and therewereno unpaidcontributions at theyear end.

Corporate GovernanceGuidelines

1. The Jersey Competition Regulatory Authority (JCRA) and the Economic Development Minister (the Minister)

1. TheJCRA (TheAuthority)is an autonomous body and entirely independent in its decision taking from the Statesof Jersey. But under powers of the Competition Regulatory Authority (Jersey) Law 2001 (the CRA Law),Article 10(1)the Economic Development Minister, "may giveto the Authority written guidance, or generalwritten directions, on matters relating to corporate governance,that is relating to the systems and arrangements by and under which the Authority is directed and controlled". Thefollowingare the Corporate Governance Guidelines as agreed between the Economic Development Minister and the Authority.
   2. What is Corporate Governance?

2.1 "Corporate governanceis the system by which business corporations are directed and controlled. Thecorporate governance structure specifiesthe distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholdersand other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it alsoprovides the structure through which the company objectivesare set, and the means of attaining those objectivesand monitoring performance."

- OECDApril 1999.

3. Constitution of the Authority

3.1 TheAuthority is a statutory body corporate establishedunder Article 2 of the CRALaw. Thegoverning body is a Board of Members which directs regulatory, licensing, financialand operational and strategic policies of the Authority.

4. Functions of the Authority

4.1 Thefunctions of the Authority areset out in Article6 of the CRA Law which states:-

1. "The Authority shallhavesuch functions as areconferred on it by or under this or anyother Law or any other enactment.
2. TheAuthority may recognise or establish, or assist or encourage the establishment of, bodies that haveexpertisein, or represent persons having interestsin, any matter concerning competition, monopolies, utilities or any matter connected with the provision of goods and services to which the Authority's functions relate.

3. The functions of those bodies shall include one or more of the following –
   1. the provision to the Authority of advice, information and proposals in relation to anyone or more of those matters;
   2. the representation of the views of anyone or more of those persons.
4. The Authority may, on request by the Minister, provide the Minister with reports, advice, assistance and information in relation to any matter referredto in paragraph(2).
5. The Authority shall have power to do anything that is calculated to facilitate, or is incidental or conducive to, the performance of any of its functions."

5. Constitution of the Board

1. Article 3 of the CRALaw requires the Board to consist of a Chairman and at least two other members.
2. Currently the Members of the Board comprise of a Non-Executive Chairman, an Executive Director, and threeNon-Executive Members. Two of the Members live in Jersey and three in the United Kingdom.
3. The appointment of Board Members is undertakenby the Minister. Vacancieswhich arise on the Board arefilled through the use of an open and transparent process. The Minister follows the procedures recommended by the Jersey Appointments Commission – a body set up by the Statesof Jersey to overview all public sector appointments. A vacancyis usually advertised and once a suitable candidate is identified, a recommendation is made to the Minister. Under the provisions of the CRALaw, the appointment of the Chairman is a matter reserved for decision by the States of Jersey on the recommendation of the Minister.The other Board Members areappointedby the Minister after it has consulted with the Chairman. TheMinister shall notify the States of the appointments.
4. Under the provisions of the CRALaw, Members areappointed for terms not exceeding five yearsand upon expiry of such period are eligible for reappointment.

6. Operations of the Board

1. TheBoard sets strategicpolicy and the implementation of these policies is undertaken by the Executive.
2. TheBoard usuallymeets at least monthly or bi-monthly and will hold additionalmeetingswhen circumstancesrequire it. In advance of each meeting,Membersare provided with comprehensive briefingpapers on the items under consideration. TheBoard is supported by the Board Secretarywho attends and minutes all meetings of the Board.
3. Thequorate numberof Members to hold a Board meeting isthree, two of whichmust be Non-Executiveswith oneacting asChairman.
4. Article 9 of the CRALaw empowers the Board to delegate anyof its powers to the Chairman, one or more of its Members, an officer or employee of the Authority or a committee whose member or members aredrawn only from the Members, officers and employees of the Authority. However,the Board is not authorised to delegate this power of delegation or the function of reviewing anyof its decisions.
5. TheBoard holds an annualawayday. This event, which may also be attended by senior staff, is an opportunity for the Board to conduct an evaluation of its performanceduring the yearand discuss strategic issuesfor the yearaheadand possiblechanges to the modus operandi.
6. TheBoard maintainsan annual budget and publishes its aims and objectives for the following year.In the last quarterof each year, the Executive Directorpreparesa draft aimsand objectives document and budget incorporating amongst other things any strategic issuesraised by the Board at its annualawayday. The budget is considered by the Board by December of each year.
7. TheBoard monitors the performance of the Authority against the aims and objectives document through reports at its regular Board meetings. Performance against budget is monitored by the presentation of quarterlymanagement accounts to the Board and ad-hoc financial presentations as and when appropriate.

8. The Authority has agreedwith the Economic Development Department a policy on travel.
9. The Executive Director makesrecommendations to the Minister in respect of feespaid to the Non-Executive Board members.

7. Committees of the Board

7.1 Article 7(1)of the CRALaw enables the Authority to establish committees.

7.2 The Board established two committees; an Audit Committee and a Remuneration Committee. Themembers of thesecommittees are appointed from within.

7.3 The key duties of the Audit Committee are–

• To review annually the Authority's application of corporate governance best practice, including the appointment of internal auditors, and setting the scope and reviewing the output of their work;

• To review the mechanisms for ensuring the effectiveness of the Authority's internalcontrols;

• To consider certain matters relating to the external audit of the Authority's annualfinancialstatements (including reviewing those financial statements prior to their consideration by the Board).

7.4 Whilst the Audit Committee's terms of reference include the consideration of the annual appointment of the externalauditor, the actualappointment of the auditor is a matter reserved to the Finance and Economics Minister under Article17 of the CRALaw.

7.5 The members of the Audit Committee areRobert Foster (Chairman), Richard Povey and Christopher Bright. The Executive Director is expected to attend the meetings of the Audit Committee in an advisory capacity.

7.6 The key duties of the Remuneration Committee are–

• To consider the remuneration of the Executive Board Member and advise the Minister;

• To agreethe budgetarylevel of the annual pay review for staff based upon market remunerationanalysis;

• To consider and agree any variations to the structure of the remuneration package that may be proposed from time to time.

Corporate GovernanceGuidelines

7. Themembers of the RemunerationCommittee are Christopher Bright (Chairman), Richard Poveyand Robert Foster.
   8. Openness, Integrity and Accountability

8.1 TheAuthority abidesby the principlesof openness,integrity and accountability – and those standards which arewidelyrecognised as being applicable to public service, and to the conduct of all involved in public life.

8.2 In the discharge of its duties, the Authority willensure:

• Thatsubject to the appropriatelevel of confidentiality,it maintains an opennessin its public affairs, in order that the public can have confidence in the decision-making processes and actions of public service bodies, in the management of the Authority's activities, and in the Board Members and staff of the Authority itself;

• Thatit maintains at alltimes an appropriate degreeof integrity in the conduct of its affairs. Integrity comprises both straightforward dealing and completeness. The Authority bases its integrity upon honesty, selflessness and objectivity,and high standards of propriety and probity in the stewardship of its funds and management of its affairs;

• Thatit is fully accountablein the application of the public funds and that these are properlysafeguarded, and are used economically, efficientlyand effectively.

8.3 Thethree fundamentalprinciples, defined abovein terms of public sector bodies, have been refined to include the findings and recommendations of the NolanCommittee on Standards in Public Life. The Authority willmake its best efforts to abide by Nolan's seven general principlesthat underpinpublic life as follows:

9. Audit & Accounts

1. While the Authority is an independent body, it is accountable for its overall performance to the States of Jersey through the Minister.
2. Article 17 of the CRALaw requires that the Authority shall keep proper accounts and proper records in the accounts and prepare a report and accounts in respect of each financialyear and provide these to the Minister no later than four months after the year end. The Minister shall layacopy of the accounts provided before the Statesas soon as practicable after he receives the report.
3. It is also a requirement of the CRALaw that the accounts are audited by auditors appointed by the Treasury and Resources Minister and be preparedin accordance with generally accepted accounting principles.

10. Other Matters

1. Under powers granted by Article 10 of the CRALaw, the Minister may, after first consulting with the Authority and whereit considers that it is necessaryin the public interest to do so, give to the Authority written guidance, or generalwritten directions, on matters relating to corporate governancewhich may include matters relating to accountability, efficiency and economy of operation of the Authority.
2. TheBoard has a Service LevelAgreement with the Minister in respect of the Competition Law grant made from the States of Jersey.

• Selflessness

• Integrity

• Objectivity

• Accountability

• Openness

• Honesty

• Leadership

JCRA

2nd Floor, SalisburyHouse 1-9 Union Street

St Helier, Jersey JE23RF

www.jcra.je