Labour's energy price fix could be challenged by courts or European Commission

Tonight we’ve spoken to Gillian Sproul, the head of competition at the law firm Mayer Brown about what looks like it will be one of Labour’s most eye-catching policies going in to the next election.

She told us that in theory the proposal could work, but the idea could leave Labour open to challenges in the courts or indeed from the European Commission.

As ever when it comes to legal opinion, as she said, "the devil is in the detail".

But there are two central questions that she told us would have to be answered.

“The first thing is the whole basis for this, is that prices are too high. Is that really right? If not then there might be a possibility of judicial review, for example," she said.

"The second one is, is it going to be applied across the board? And that was a question that was raised by the European Commission when the Belgian authorities decided they were going to do the same thing.

“It’s basically fairness, it’s making sure that it applies equally to every company, also to anybody that wants to supply into the UK.”

The Belgian government tried the same thing last year - to fix prices for consumers - and found themselves subject to a challenge from the European Commission.

Labour says they are determined to do this, and plan to change the law, which could clear these legal obstacles.

They have also taken legal advice which suggests they could carry through the proposal, but they may have first to prove that the market does not work.

Millions of consumers might justifiably think that is straightforward. But when it comes to the law, it is rarely straightforward. Industry sources tell me they’re likely to consult their own lawyers.

It is also worth noting that Ofgem, the existing regulator, does have powers to impose price controls in a ‘proportionate or timely’ manner.

But controls are a world away from introducing price freezes. Sources questioned how realistic this would be.

If there was a spike in world energy prices for example, it was suggested a price freeze could actually put companies out of business.