Antitrust: restrictive agreements and dominance
The prohibition in Chapter I of CA98 captures a range of restrictive agreements, including both cartels and those agreements (both vertical and horizontal) that do not constitute hardcore cartels but nevertheless damage competition. The most important such Chapter I cases for 2017/2018 are outlined below, together with Chapter II cases (dealing with the abuse of a dominant position).i Significant casesRestrictive agreements under Chapter 1Ping
The most significant development in 2018 was the CAT's decision in Ping Europe Limited v. Competition and Markets Authority. The CMA had fined Ping, a golf club manufacturer, £1.45 million for banning two UK retailers from selling its golf clubs online, and ordered Ping to bring the online sales ban to an end. Ping appealed the decision, arguing that the sales ban was justified on the grounds that:
- Ping's freedom to sell the kind of product it wanted to sell (e.g., customised golf clubs) was infringed by forcing it to sell non-customised clubs online, contrary to the European Union Charter on Fundamental Rights;
- the online sales ban was not a restriction of competition by object;
- the CMA's finding that the online sales ban was disproportionate because 'less restrictive' options were available was wrong because those less restrictive options would be impractical and less effective than the ban;
- the online sales ban fell within the 'ancillary restraint doctrine' or was exempt under Article 101(3) TFEU and Section 9 of the CA 1998, as it produced real benefits to consumers that could not be achieved any other way;
- the CMA should not have imposed a fine as the alleged infringement was not committed intentionally or negligently; and
- the fine was excessive and should be reduced.
The CAT dismissed the human rights argument, and upheld the CMA's finding that the ban was a restriction of competition 'by object'. The CAT also dismissed Ping's arguments around proportionality and objective justification, but the fine was reduced by £200,000 because the CMA had erred in treating director involvement as an 'aggravating factor'.Conduct in the transport sector (facilities at airports)
The CMA fined Heathrow £1.6 million for restricting competition parking prices in a lease with the operator of a Terminal 5 hotel. The pricing restriction prevented the hotel group from charging non-hotel guests prices that were cheaper than those offered at other Heathrow car parks. The hotel group was granted immunity for coming forward under the CMA's leniency programme and was not fined.Atlantic joint business agreement investigation
In October 2018, the CMA opened an investigation into the Atlantic Joint Business Agreement, which was signed by American Airlines, British Airways, Iberia and Finnair. The Commission accepted commitments in 2010 in relation to six routes, and the CMA has now decided to 'review afresh the competitive impact of the agreement in anticipation of the expiry of the commitments'. Ordinarily this could be left to the Commission but in light of Brexit (and the fact that five of the six routes in question are from the UK) the CMA has launched what it describes as its 'first 'Brexit' case'.Abuse of dominant position under Chapter II
No abuse of dominance cases reached a decision at CMA level in 2018, but the CAT handed down judgments in the appeals against the CMA's pay-for-delay (GlaxoSmithKline) and excessive drug pricing (Pfizer/Flynn) cases. In respect of Pfizer/Flynn, the CAT in June 2018 quashed the record £84.2 million and £5.2 million fines that were imposed on Pfizer and Flynn respectively, after finding that the CMA's test for unfair pricing had been wrongly applied. In the GSK paroxetine pay-for-delay case, the CAT issued an intermediate judgment dismissing a number of the grounds for appeal and referring a number of legal questions to the CJEU.ii Trends, developments and strategies
Although no decisions were rendered in 2018, the pharmaceutical sector remains high among the CMA's antitrust enforcement priorities, particularly given that by far the largest customer of pharmaceutical products in the UK is the taxpayer-funded National Health Service. A number of the CMA's open cases are in the pharmaceutical sector. A supplementary statement of objections was issued in January 2019 in the CMA's Liothyronine Tablets investigation and the Hydrocortisone Tablets investigation is ongoing. The CMA's wide-ranging investigation into suspected anticompetitive agreements and concerted practices and suspected abuse of dominance in relation to the supply of generic pharmaceutical products is also ongoing (currently in the information gathering stage).iii Conclusion
Increased antitrust and cartel enforcement should be expected post-Brexit, as the CMA and sectoral regulators become the sole authorities able to review conduct in and affecting the UK. Key areas of interest are likely to continue to be pharmaceuticals and the digital commerce sector.