Abstract
In April 2014, a number of significant reforms to the UK competition law regime were introduced. These were given effect through the Enterprise and Regulatory Reform Act 2013 (ERRA13), which received Royal Assent on 25 April 2013.
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Notes
- 1.
The various UK sectoral regulators—CAA (air traffic services), Monitor (healthcare sector), Ofcom (communications/post), Ofgem (and NIAUR in Northern Ireland) (electricity and gas), Ofwat (water and sewerage), ORR (rail)—will retain their concurrent competition powers.
- 2.
The CMA will also have powers to enforce a range of consumer protection legislation, and will also take on the CC’s powers and duties in relation to the conduct of appeals regarding regulatory determinations.
- 3.
The UK equivalents of Article 101 TFEU and Article 102 TFEU are known, respectively, as the “Chapter I prohibition” and the “Chapter II prohibition”.
- 4.
References in this paper are to the EA02 as amended by the ERRA13, unless otherwise stated.
- 5.
Prosecutions may only be brought by the CMA or the Serious Fraud Office or with the consent of the CMA. Prosecutions will generally be undertaken by the CMA. The settlement of criminal cases under the UK’s competition regime is not considered in this paper.
- 6.
- 7.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/274146/bis-14-559-competition-and-markets-authority-performance-management-framework.pdf. In October 2013, the Government also published a non-binding ministerial statement of strategic priorities for the CMA, which include identifying markets where competition is not working well and tackling constraints on competition, defending fair competition and enforcing antitrust rules robustly, challenging governmental barriers to competition and delivering positive competition outcomes.
- 8.
This occurred in the OFT’s tobacco products investigation (http://www.oft.gov.uk/news-and-updates/press/2010/39-10). A number of parties settled, two of which (Gallaher and Somerfield) then challenged the infringement decision. The appeals were ultimately dismissed; see further Sect. 16.2.3 below.
- 9.
Although this paper does not consider in any detail the rights of third parties, we consider that the relevant legislation and guidance, together with legal precedent, ensure that there are sufficient mechanisms to safeguard the legitimate interests of third parties in UK competition proceedings, for example, the ability to obtain “Formal Complainant” status in CA98 cases (which gives third parties the opportunity to become involved in key stages of an investigation), make representations on draft commitments, be consulted about the proposed scope of remedies in merger and market study/investigation cases and appeal against decisions made under the CA98 or the EA02.
- 10.
Certain sectoral regulators have concurrent jurisdiction to enforce the Chapter I and II prohibitions within their regulated sectors. The Chapter I and Chapter II prohibitions (and Articles 101 and 102 TFEU) may also be invoked in private litigation in the UK courts.
- 11.
Settlements have also been described as ‘early resolution agreements’. However, in this paper the term ‘settlement’ will be used throughout.
- 12.
Voluntary assurances do not, however, preclude further investigation should further evidence of potential infringements become available.
- 13.
Section 31A CA98 gives the CMA the power to accept legally binding commitments.
- 14.
The CMA is very unlikely to accept commitments in cases involving secret cartels between competitors or a serious abuse of a dominant position. The CMA is also less likely to accept commitments if it would be difficult to monitor compliance with the commitments and their effectiveness.
- 15.
Although the SO is never published in any form, a non-confidential version may be shared with interested third parties (e.g., a complainant).
- 16.
Third parties will be given at least 11 working days to comment.
- 17.
The scope of the infringement will include as a minimum the material facts of the infringement as well as the legal characterisation of the infringement. An admission of the facts alone is not sufficient to constitute an admission of liability sufficient to form the basis of a settlement.
- 18.
For example, the CMA Guidance states that the discount for settlement post-SO will be 10 %. In some previous cases the settlement discount was as high or higher for post-SO settlement (e.g. 20 % in Tobacco and 30–35 % in Dairy) than for settlement pre-SO (e.g. 15 % in Loan pricing and 20 % in Care home security).
- 19.
The CMA retains the right to withdraw from the settlement procedure if the settling party, after having made its admission, fails to follow the requirements for settlement. In such circumstances, prior to withdrawing from the settlement process, the CMA will notify the settling party that it considers that it is not following the requirements of settlement and will give the party the opportunity to respond.
- 20.
In this respect, it should be noted that, under the CMA’s new procedure, settlement discounts are capped at 20 %, partly to ensure that there is sufficient distinction between immunity and the discounts available to leniency applicants that also choose to settle with the CMA. In other words, in order to ensure that the settlement procedure (which applies after the CMA has begun investigating the case) does not disincentivise parties from seeking leniency (including applying for leniency before the CMA begins an investigation), the levels of reductions in fine must be sufficiently material.
- 21.
In the UK, depending on the circumstances, immunity from criminal prosecution may also be possible.
- 22.
Whereas Type A immunity is available as of right if the necessary conditions are met, Type B immunity is discretionary. However, the Leniency Guidance states that although Type B does not offer guaranteed immunity, Type B applications made at an early stage of the CMA’s investigation are more likely to result in the grant of corporate immunity and/or criminal immunity than late-stage Type B applications or Type C applications.
- 23.
Under Type C leniency, criminal immunity for implicated former and current directors and employees may be agreed on an individual basis with the CMA.
- 24.
The new regime is intended, amongst other things, to make merger reviews faster and more efficient. See also Mergers: Guidance on the CMA’s jurisdiction and procedure (Mergers Guidance), available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/270256/CMA2_Mergers_Guidance.pdf.
- 25.
Phase 1 decisions are formally taken by the CMA Board, while Phase 2 decisions are made by an inquiry group of at least three people, selected for each case from the independent expects appointed to the CMA’s panel by the Secretary of State.
- 26.
UILs may be accepted by the CMA only where it has concluded that the test for referring the case to Phase 2 is met.
- 27.
Taking the initiative in this way will not impact on the prospect that the CMA ultimately determines that the test for a reference has not been met.
- 28.
This is one of the procedural reforms introduced into the UK merger control regime by ERRA13.
- 29.
Parties have up to 5 working days after receiving the CMA’s reasons for its SLC decision to offer UILs.
- 30.
CC8, published by the CC in November 2008, adopted by the CMA.
- 31.
During this process, all interested parties have the opportunity to provide their comments, which will be taken into account by the CMA.
- 32.
If parties wish to propose potential remedies in advance of publication of the Provisional Findings, details of the proposals should be provided in writing and may be discussed with the case team without prejudice to the Provisional Findings. For anticipated mergers, one possibility will be prohibition of the merger; for completed mergers (as the UK does not have a mandatory system of merger control requiring parties to seek and obtain clearance before a merger can be completed), remedies including the possibility of divestment of, inter alia, the acquired business will be considered.
- 33.
Following the Provisional Findings, response hearings will take place. These will generally be held with the main parties and potentially with key third parties (this could include potential buyers, customers or relevant economic regulators) likely to provide evidence or views useful for reaching a final decision on the competition questions and/or on remedies.
- 34.
The process of agreeing undertakings or making an order will involve informal consultation between the CMA and the main parties. Third parties may also be consulted where relevant. Parties will be asked to comment both on the substance of the draft undertakings or order and on any material which they consider to be confidential and which they would want to be excised from the published version.
- 35.
For example, Stericycle International v CC (2006); Somerfield v CC (2006); Stagecoach Group v CC (2010); Groupe Eurotunnel v CC (2013); Ryanair v CC (2014). In some cases, such as Groupe Eurotunnel and Ryanair, parties also challenged the CC’s jurisdiction to investigate the merger, as well as its decision on remedies.
- 36.
Sectoral regulators have concurrent competition law powers in respect of market studies and investigations. In addition, the Financial Conduct Authority (FCA) can conduct market studies using its powers under the Financial Services and Markets Act 2000.
- 37.
Adverse effects on competition that do not involve either agreements between undertakings or abuses of dominance are outside the scope of CA98. Market investigation references are therefore likely to focus on competition problems arising from unco-ordinated parallel conduct by several firms or industry-wide features of a market in cases where the CMA does not have reasonable grounds to suspect the existence of anti-competitive agreements or dominance. They are in some respects similar to EU sector inquiries, except that the CMA has the power to impose remedies if considered appropriate even in the absence of any infringement of the Chapter 1 prohibition/Article 101 TFEU or the Chapter 2 prohibition/Article 102 TFEU.
- 38.
An overview of the changes to the markets regime introduced by the ERRA13 is provided in the CMA guidance Market Studies and Market Investigations: Supplemental guidance on the CMA’s approach (January 2014)—https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/270354/CMA3_Markets_Guidance.pdf.
- 39.
- 40.
This period can be extended by up to a further 6 months if the CMA considers that there are special reasons why the investigation cannot be completed and the report published within 18 months.
- 41.
Guidelines for market investigations CC3 (revised)—http://www.competition-commission.org.uk/assets/competitioncommission/docs/2013/publications/cc3_revised_.pdf.
- 42.
The content of any orders made by the CMA is limited by the EA02, whereas the subject matter of an undertaking is not similarly limited.
- 43.
In 2009, in BAA airports, the CC required BAA to divest its airports at Gatwick, Stansted and either Glasgow or Edinburgh. In January 2014, in Aggregates, cement and ready-mix concrete, the CC ordered, inter alia, Lafarge Tarmac to divest a cement plant and, if required by the purchaser, a number of ready-mix concrete plants and Hanson to divest one of its ground-granulated blast-furnace slag production facilities. In April 2014, in Private healthcare, the CMA (in a case inherited from the CC) required the divestment by HCA International of two hospitals in central London.
- 44.
For example, Supply of groceries (see Tesco PLC v CC—http://www.competition-commission.org.uk/our-work/directory-of-all-inquiries/groceries-market-investigation-and-remittal) and Payment protection insurance (see Barclays Bank PLC v CC—http://www.competition-commission.org.uk/our-work/directory-of-all-inquiries/ppi-market-investigation-and-remittal).
- 45.
For example, the Hotel Online Booking case raised issues about the discounting of room-only hotel accommodation booked through online travel agents (OTA) which, arguably, may have been better suited to have been concluded with a reasoned decision (whether an infringement, or non-infringement, decision). In fact, this case is now subject to an appeal to the CAT by a third party OTA. It is the first CA98 commitment decision that has been appealed, and the judgment which is due later this year is awaited with interest.
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Israel, M. (2016). United Kingdom. In: Kilpatrick, B., Kobel, P., Këllezi, P. (eds) Compatibility of Transactional Resolutions of Antitrust Proceedings with Due Process and Fundamental Rights & Online Exhaustion of IP Rights. LIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition. Springer, Cham. https://doi.org/10.1007/978-3-319-27158-3_16
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