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Trends and climate
Have there been any recent changes to the cartel regime? If so, have they had a significant impact on enforcement activity?
The Consumer Rights Act 2015 came into force on October 1 2015. Among other things, the act strengthened the private enforcement powers of the Competition Appeal Tribunal by enabling it to adjudicate on stand-alone as well as follow-on damages actions and grant injunctions.
The Damages Directive (2014/104/EU) was recently transposed into UK law by virtue of regulations which came into force on March 9 2017. As well as codifying certain existing practices, the directive contains significant substantive changes, including the introduction of:
- a rebuttable presumption of harm as a result of cartels;
- a restriction on the liability of immunity recipients; and
- a provision to suspend the limitation period during an investigation by a competition authority or during consensual dispute resolution.
As the directive applies only to claims in respect of infringements commencing after March 9 2017, the effect of the regulations is unlikely to be felt for some years. However, there may be an increase in immunity applications in respect of infringements commencing after March 9 2017 due to the fact that the liability of immunity recipients will be limited to claims by direct or indirect purchasers of their own goods or services.
Are there any proposals to reform or amend the existing cartel regime?
The UK electorate voted to leave the European Union on June 23 2016. The exact scope of any changes to cartel regulation within the United Kingdom as a result of Brexit is not yet known, but it is likely that once the United Kingdom leaves the European Union, businesses will be subject to parallel investigations by the UK and EU competition authorities (as the latter will no longer have jurisdiction over the UK elements of a cartel), and will need to consider applying for immunity in both the United Kingdom and the European Union.
Have there been any recent key cases?
In recent years, the Competition and Markets Authority (CMA) has investigated cartel conduct across a range of sectors and issued infringement decisions in respect of anti-competitive agreements or concerted practices in industries including:
- bathroom fittings;
- commercial catering;
- sport and entertainment merchandise;
- modelling agencies; and
- steel water storage tanks.
A recent area of focus has been online resale price maintenance. In May 2016 the CMA imposed fines of £786,668 and £2,298,820 respectively on Ultra Finishing Limited and ITW Limited for engaging in such conduct in the bathroom fittings and commercial catering sectors.
In recent criminal investigations, an individual was convicted of the criminal cartel offence in September 2015 for dishonestly agreeing with others to fix prices, divide customers and rig bids between 2005 and 2012 in respect of steel water storage tanks. The defendant was sentenced to six months’ imprisonment (suspended for 12 months) and 120 hours of community service.
In March 2016 an individual entered a guilty plea for dishonestly agreeing with others to divide supply, fix prices and divide customers between 2006 and 2013 in respect of certain concrete products. No cases as yet have been brought under the new cartel offence, which removes the requirement of dishonesty.
Which legislation applies to cartels and what are the relevant substantive provisions?
The Competition Act 1998 and the Enterprise Act 2002 – both as amended by the Enterprise and Regulatory Reform Act 2013 – govern the regulation of cartels in the United Kingdom.
In line with Article 101 of the Treaty on the Functioning of the European Union, Chapter I of the Competition Act 1998 prohibits:
- agreements between undertakings; and
- decisions by associations of undertakings or concerted practices that may affect trade within the United Kingdom and have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom.
The interpretation of Chapter I is intended to be consistent with corresponding EU rules.
Under the Enterprise Act 2002 it is a criminal offence for an individual to agree with one or more others to make or implement – or to cause to be made or implemented – arrangements relating to at least two undertakings and involving any of the following cartel conduct:
- price fixing;
- market sharing;
- limitation of production or supply; and
- bid rigging.
It is no longer necessary for prosecutors to establish the mental element of dishonesty.
Which bodies are the relevant regulatory and prosecutory authorities and what are their specific roles?
The Competition and Markets Authority (CMA) and certain sectoral regulators are responsible for enforcing Chapter I and Article 101 in the United Kingdom.
In respect of the criminal cartel offence, the CMA shares its investigatory and prosecutory powers with the Serious Fraud Office in England, Wales and Northern Ireland, and with the Lord Advocate and the National Casework Division in Scotland.
Are there any sectoral regulators with concurrent powers?
The following sectoral regulators have concurrent powers with the CMA to enforce Chapter I and Article 101 in the United Kingdom:
- the Office of Communications;
- the Gas and Electricity Markets Authority;
- the Water Services Regulation Authority;
- the Office of Rail and Road;
- the Northern Ireland Authority for Utility Regulation;
- the Civil Aviation Authority;
- the Payment Systems Regulator; and
- the Financial Conduct Authority.
Does the legislation apply to both formal agreements and informal practices?
Both Chapter I and Article 101 apply to:
- agreements between undertakings;
- decisions by associations of undertakings; and
- concerted practices, whether formal or informal.
Does the legislation apply to individuals, companies or both?
Both Chapter I and Article 101 apply to conduct between undertakings. The criminal cartel offence applies only to individuals.
Does the legislation subject companies to civil liability, criminal liability or both?
Companies are subject to civil liability by virtue of Chapter I and Article 101.
Does the legislation subject individuals to civil liability, criminal liability or both?
Individuals are subject to criminal liability by virtue of the Enterprise Act 2002. There are also civil and criminal sanctions for certain actions of individuals under the Competition Act 1998.
Where cartel conduct is punishable by both civil and criminal penalties, can the enforcement authority pursue both types of penalty? How does the authority decide which penalties to seek?
It is open to enforcement authorities to seek civil and criminal sanctions in respect of the same cartel, although only individuals can be criminally liable.
Are there any sector-specific offences or exemptions?
There are certain sector-specific exemptions (eg, agreements regarding the production of, or trade in, agricultural products and agreements subject to scrutiny under the Broadcasting Act 1990 and the Communications Act 2003). In addition, the secretary of state is entitled to exclude other categories of agreement if satisfied that there are exceptional and compelling public policy reasons for exclusion.
To what extent, if any, does the legislation apply to extraterritorial conduct?
The Chapter I prohibition applies if an agreement or concerted practice is, or is intended to be, implemented in the United Kingdom. Article 101 applies if an agreement or concerted practice is, or is intended to be, implemented in the European Union. The criminal cartel offence will apply to an agreement outside the United Kingdom only if it is, or is intended to be, implemented in the United Kingdom.
Initiating an investigation
Who can initiate an investigation of potential cartel conduct?
An investigation may be initiated as a result of:
- the Competition and Markets Authority’s (CMA) research and market intelligence functions;
- other sources of information open to the CMA, such as its merger or markets functions, use of its surveillance powers under the Regulation of Investigatory Powers Act 2000 or information received via the European Competition Network or the European Commission;
- whistleblowing by cartelists; and
If an investigation is initiated by complainants or third parties, what rights (if any) do they have?
The CMA will grant formal complainant status to a complainant who requests such status and whose interests are, or are likely to be, materially affected by the subject matter of the complaint. The CMA may involve a formal complainant at certain stages of an investigation. For example, it may offer formal complainants access to the same information available to undertakings under investigation at the beginning of an investigation. Where the CMA is minded to close an investigation on grounds of administrative priorities or on the basis that there are no grounds for action, formal complainants are given an opportunity to comment in advance of the CMA taking its final decision. Where the CMA issues a statement of objections, it will invite formal complainants who may be able materially to assist its assessment of a case to submit written representations on receipt of a non-confidential version.
What obligations does a company have on learning that an investigation has commenced?
A company must cooperate with the CMA when it exercises its statutory powers as part of its investigation. There are civil and criminal sanctions for individuals who fail to cooperate and other frustrating actions as described in detail below.
What obligations does a company have if it believes that an investigation is likely?
A company does not have specific obligations before an investigation commences. However, a company may wish to conduct an immediate internal investigation in such circumstances to establish the likely degree of its exposure if an investigation is launched and to consider applying for immunity or leniency. Firms regulated by the Financial Conduct Authority (FCA) must report significant actual or potential contraventions of competition law to the FCA.
What are the potential consequences of failing to act or delaying action?
As companies do not have any specific obligations before an investigation commences, there are no formal consequences of failing to act or delaying action.
Formal stages of investigation
What are the formal stages of and approximate timeframe for investigations?
The CMA will open an investigation if there are reasonable grounds to suspect a breach of competition law and the case falls within its enforcement priorities. After opening an investigation, the CMA will:
- allocate the case team;
- send the undertakings concerned a case initiation letter with details of the conduct under investigation, the relevant legislation, the case-specific timetable and relevant contacts; and
- generally publish a notice of investigation on its website.
During the investigation, the CMA will inform the parties of its progress, either by telephone or in writing. Parties will also be able to meet with the case team at ‘state of play’ meetings to receive updates on progress.
The CMA may conclude an investigation by:
- closing it on grounds of administrative priorities;
- issuing a no grounds for action decision on the basis that there is insufficient evidence of an infringement;
- accepting commitments from an undertaking as to its future conduct; or
- issuing a statement of objections.
Where its provisional view is that the conduct under investigation amounts to an infringement, after issuing a statement of objections and allowing the parties to make representations, the CMA may issue a final infringement decision where the legal test to establish an infringement is met and impose fines or directions to bring the infringing conduct to an end.
In the CMA’s most recent cases, the typical timeframe from opening an investigation to issuing an infringement decision is one to two years, but some cases have taken much longer to resolve.
What investigative powers do the authorities have?
Powers to request information and ask questions
Where the CMA has reasonable grounds to suspect that an agreement or concerted practice is in breach of Chapter I or Article 101, it may require any person to provide specified documents or information relevant to its investigation. In addition, the CMA may require an individual connected with an undertaking under investigation to attend an interview and answer questions.
Where the CMA has reasonable grounds to suspect that the criminal cartel offence has been committed, it may require the individual under investigation or any other person with relevant information to answer questions or otherwise provide information relevant to its investigation. In addition, it may require the individual under investigation or any other person with relevant information to produce specified documents and other documents relevant to its investigation, and require an explanation of a document from the person producing it or a statement of where such a document may be found.
On-site investigations This section details the circumstances in which the CMA is authorised to search business or personal premises under the Competition Act 1998 in respect of suspected breaches of Chapter I or Article 101 and under the Enterprise Act 2002 in respect of the criminal cartel offence.
Surveillance and access to communications data The CMA can conduct directed surveillance (monitoring the movements of individuals) and use covert human intelligence sources (informants) in civil and criminal investigations. In addition, it may authorise intrusive covert surveillance in respect of personal premises and private vehicles, including entering private property in order to install surveillance devices to investigate the criminal cartel offence. It may also access communications data (eg, details of the times, duration and recipients of communications such as telephone calls).
What is the geographic reach of public enforcement actions?
The CMA can exercise its investigatory powers only in the United Kingdom.
When is court approval required to invoke these powers?
In the following circumstances, the CMA must apply to the Competition Appeal Tribunal or a judge of the High Court (or of the Court of Session in Scotland) to enter business or personal premises in exercising its powers under the Competition Act 1998:
- There are reasonable grounds to suspect that there are documents which have not been produced as required;
- There are reasonable grounds to suspect that there are documents which the CMA has powers to require but which, if the CMA did require them, would be:
- tampered with; or
- destroyed; or
- An officer was unable to enter and there are reasonable grounds to suspect that there are documents which the CMA has powers to require – this does not apply to personal premises.
The CMA (or the procurator fiscal in Scotland) must apply to the Competition Appeal Tribunal or the High Court (or the sheriff in Scotland) to enter premises in exercise of powers under the Enterprise Act 2002 if there are reasonable grounds to believe that there are documents on the premises whose production the CMA has powers to require and one of the following applies:
- The documents have not been produced as required;
- It is not practicable to serve a notice in relation to them; or
- The service of such a notice might seriously prejudice the investigation.
To conduct directed surveillance, use covert human intelligence sources or access communications data, the CMA must obtain approval from a justice of the peace in England and Wales, a sheriff in Scotland or a district judge in Northern Ireland. To interfere with property (eg, in order to install surveillance devices), the CMA must obtain approval from a commissioner in circumstances where the property is used wholly or mainly as a dwelling or as a bedroom in a hotel or constitutes office premises or where the interference is likely to result in any person acquiring knowledge of matters subject to privilege, confidential personal information or confidential journalistic material.
Are searches of business and personal premises authorised? If so, which bodies carry out searches and will they wait for legal advisers to arrive?
The CMA can enter any business premises without a warrant in order to:
- require any person to produce any document or information relevant to its investigation, including information stored in electronic form and accessible from the premises in question;
- require any person to explain any such document;
- require a person to state, to the best of his or her knowledge and belief, where any such document is to be found; and
- make copies of, or take extracts from, any such document.
Where certain conditions are met, the CMA may obtain a warrant to enter business and personal premises in order to search for and obtain documents of a kind in respect of which the warrant was granted. In such circumstances, reasonable force may be used to obtain entry and officers may, in addition to exercising the powers available in raids without a warrant as set out above, take away documents and retain them for three months if such action appears necessary to preserve or prevent interference with the documents or it is not reasonably practicable to make copies of the documents on the premises in question. Officers can take any other steps necessary to preserve or prevent interference with documents.
An investigating officer is not required to wait for legal advisers to arrive in order to commence a raid. However, upon request – and if the officer considers it reasonable in the circumstances and is satisfied that the occupier will comply with any conditions of granting its request (eg, sealing cabinets, suspending external emails and allowing the officer to enter and remain in occupation of selected offices) – he or she must allow a reasonable time for the occupier’s legal advisers to arrive. However, any delay must be kept to a strict minimum and if an in-house legal adviser is present on the premises or if the occupier was given notice of the raid, the officer need not wait for an external legal adviser to arrive.
In respect of the criminal cartel offence, the CMA must obtain a warrant to enter any premises in order to search for and obtain documents of a kind in respect of which the warrant was granted. Reasonable force may be used to obtain entry and officers may:
- take any documents of the relevant kind;
- take any other steps necessary to preserve or prevent interference with relevant documents;
- require any person to provide an explanation of any relevant document or a statement of where such a document may be found;
- require the production of any relevant information stored in electronic form and accessible from the premises in a visible and legible form in which it can be taken away; and
- seize and remove material in certain circumstances.
What level of cooperation with the authorities is required and what are the consequences for failing to cooperate?
Under the Competition Act 1998 and the Enterprise Act 2002, there are civil and criminal sanctions respectively for failure to cooperate with the CMA without reasonable excuse (eg, refusing to provide an explanation of a relevant document). In addition, it is a criminal offence to:
- intentionally obstruct an officer exercising powers to enter premises;
- destroy or falsify documents; or
- provide false or misleading information.
The sanctions for such offences are fines and in some cases imprisonment.
Is in-house legal advice or attorney work product protected by the law of privilege? Does this extend to the advice of in-house counsel?
In exercising its investigatory powers, the CMA cannot require a person to produce communications protected by legal professional privilege. These include communications with in-house lawyers. Where the CMA is assisting the European Commission in carrying out an on-site investigation, the EU privilege rules will apply, in accordance with which a communication with an in-house lawyer or a communication with an external non-European Economic Area qualified lawyer is not privileged.
Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?
The privilege against self-incrimination means that the CMA cannot force an individual to answer questions or surrender information that would amount to admitting an infringement of the law. However, it can ask questions about, or require the production of, documents already in existence or information relating to facts such as whether a given employee attended a particular meeting.
What is the process for objecting to an authority’s exercise of its claimed powers?
There is no statutory procedure for challenging an exercise of the CMA’s investigatory powers or statutory right of appeal to the Competition Appeal Tribunal. A party may raise any concerns with the senior responsible officer (SRO) on its case and refer the matter to the procedural officer if the SRO cannot resolve it. Alternatively, parties can challenge an exercise of power by the CMA by way of judicial review.
Publicity and confidentiality
What information about investigations will be made publicly available and at which stage(s) of the process?
At the beginning of an investigation, the CMA generally publishes a notice of investigation on its website, setting out basic details of the case and a case-specific administrative timetable. The CMA would generally not expect to publish the names of the undertakings under investigation except in exceptional circumstances.
After the analysis and review stage of an investigation, the CMA will announce the outcome of its investigation. Where it closes its investigation on grounds of administrative priorities, it will issue a statement to explain its reasons for closing the case. Where there is insufficient evidence of an infringement, it may publish a reasoned no grounds for action decision. Where it accepts commitments from a business as to its future conduct, it will publish the commitments on its website. Where its provisional view is that the conduct amounts to an infringement, it will issue a statement of objections (SO) to each responsible undertaking and announce the issuing of the SO on its website, generally including the identities of its addressees. The SO will set out the facts and the CMA’s legal and economic assessment of them which has led to its provisional view that an infringement has occurred. Where the CMA concludes that there has been an infringement, it will publish a non-confidential version of its final decision and a summary on its website. Otherwise, it will publish a reasoned no grounds for action decision.
Is any information automatically confidential and is confidentiality available on request?
Any information concerning the affairs of an individual or the business of an undertaking which comes to the CMA in connection with an investigation under Chapter I and Article 101 or into criminal cartel conduct is confidential and may not be disclosed during the lifetime of the individual or while the undertaking continues in existence, except in certain specified circumstances (eg, where the CMA has obtained the necessary consents or where disclosure is to facilitate the exercise by the CMA of its statutory functions). Before disclosing such information, the CMA must consider the need to exclude from disclosure the following:
- any information whose disclosure would be contrary to the public interest;
- commercial information whose disclosure may significantly harm the legitimate business interests of the undertaking to which it relates; and
- information regarding the private affairs of an individual whose disclosure may significantly harm the individual’s interests.
Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?
The CMA cooperates extensively with the European Commission and national competition authorities of the other EU member states through the European Competition Network. In addition, the United Kingdom has mutual assistance arrangements relating to competition law enforcement with various other countries, including Australia, Canada, New Zealand and the United States.
Do the relevant enforcement authorities request waivers so as to allow for increased cooperation with authorities in other jurisdictions? What are the consequences of declining to grant a waiver?
In cases where an applicant has applied for leniency in other jurisdictions, the CMA would request – and expect to receive – a waiver of confidentiality in order to be able to discuss appropriate matters with such jurisdictions. Generally, a transfer of information is limited to what is necessary to coordinate concerted action such as on-site investigations. Particular sensitivities for an applicant regarding such waivers should be raised promptly with the CMA. Ideally, applicants’ advisers should take instructions on the issue of waivers in advance of making an application, as the CMA may need to coordinate with other jurisdictions with some urgency once an application has been made.
How is a cartel investigation resolved? Are settlements, plea bargains or other negotiated resolutions available?
There is an option of settlement. The CMA has a broad discretion to choose whether it wishes to settle a case. Settlement is a voluntary process in which an undertaking must admit its infringement of competition law, cease the infringing conduct immediately and agree to pay a penalty. A settling party must also accept a more streamlined administration of its case (eg, more limited access to file), in order for the CMA to adopt an infringement decision in less time or with less resources than usual). In exchange for settling, parties will receive the following penalty discounts:
- up to 20% – if the settlement was pre-issuing of the SO; or
- 10% – if the settlement was post-issuing of the SO.
What is the process for negotiating a settlement, plea bargain or other negotiated resolution? Do such resolutions require court or other approval?
Parties may approach the CMA before or after the SO has been issued to register an interest in settling, but it is the decision of the CMA as to whether to enter into settlement discussions. The Case and Policy Committee must authorise the senior responsible officer (SRO) to engage in settlement discussions; the discussions are then typically led by the SRO. Resolving an investigation by means of settlement does not require court approval.
If a settlement is not reached, what is the procedure for adjudicating a charge of cartel conduct?
If a settlement is not reached, the investigation is resolved in accordance with the usual methods of resolution.
Which party must prove its case? What is the relevant standard of proof?
In respect of investigations under the Competition Act 1998, the burden is on the CMA throughout the proceedings to prove its case in accordance with the normal civil standard (the balance of probabilities). In respect of the criminal cartel offence, the CMA or the Serious Fraud Office must prove its case in accordance with the normal criminal standard (beyond reasonable doubt).
Is there a hearing? If so, what is the process for submitting evidence and testimony?
The CMA will offer all addressees of an SO the opportunity to attend an oral hearing. The addressee will agree an agenda with the case team, with time for the addressee to make oral representations and for the CMA to ask the addressee questions in respect of such representations. As a general rule, the addressee must confine itself to making oral representations on matters already raised in its written representations. The CMA may ask the addressee to clarify information set out in its written representations; the addressee may respond orally or in writing after the hearing.
What are the accused’s procedural rights?
Parties under investigation are entitled to make written representations in response to the SO; the deadline for submissions is usually at least 40 working days from the issue of the SO. Parties are also entitled to inspect copies of the disclosable documents in the CMA’s file; access to the file is typically available for a period of six to eight weeks and excludes confidential information and internal documents of the CMA. Addressees of an SO are entitled to attend an oral hearing and make oral representations on the SO. A procedural officer who has not been involved in the relevant investigation chairs the hearing and is required after it to confirm that the addressees’ right to be heard has been respected.
What is the appeal process?
Any party to an agreement or concerted practice in respect of which the CMA or a sectoral regulator has made a decision or any other applicant with a sufficient interest may appeal to the Competition Appeal Tribunal under the Competition Act 1998 within two months of receiving notice of the decision. Judgments of the Competition Appeal Tribunal on a point of law or as to the amount of any fine can be appealed to the Court of Appeal. Judgments of the Court of Appeal on a point of law which is of general public importance can be appealed to the Supreme Court. Criminal cartel convictions may be appealed to the higher courts following the usual procedure which governs criminal cases.
To what extent can the appeal body review the agency’s findings of fact, legal assessment and penalties?
The Competition Appeal Tribunal hears full merits appeals on the findings of fact or law and on the amount of any fine.
Penalties for companies
What are the potential penalties for companies involved in a cartel?
Companies found to have breached Chapter I and Article 101 may face fines up to a maximum of 10% of their worldwide turnover in their last business year.
Are there guidelines in place for penalties? If not, how are penalties normally calculated?
The Competition and Markets Authority’s (CMA) guidance on penalties sets out that any penalty imposed in respect of a Chapter I and Article 101 infringement will be calculated in six steps:
- Step 1 – calculation of the starting point with regard to the seriousness of the infringement and the relevant turnover of the undertaking.
- Step 2 – adjustment for duration.
- Step 3 – adjustment for aggravating or mitigating factors.
- Step 4 – adjustment for specific deterrence and proportionality.
- Step 5 – adjustment to prevent the penalty exceeding the maximum amount of 10% of worldwide turnover in the previous business year and to avoid double jeopardy.
- Step 6 – adjustment for leniency or settlement discounts.
The sentencing limits in respect of the criminal cartel offence are set out in the Enterprise Act 2002. The general sentencing guidelines of the UK courts apply to the criminal cartel offence.
Do the authorities take into account any penalties imposed in other jurisdictions?
If a fine has been imposed by the European Commission, or by a court or other body in another member state in respect of the same agreement or conduct, this will be taken into account by the CMA.
How can a company mitigate its exposure to fines?
Cessation of cartel conduct is essential. To receive the maximum reduction in fines, a company may want to consider whistleblowing and making an immunity application to the CMA. Whether or not it wishes to apply for immunity or leniency, a company should conduct an internal investigation in order to establish the likely degree of its exposure by identifying relevant documents and taking statements from relevant employees. A company may also consider introducing a comprehensive compliance programme for relevant employees to demonstrate its intention to avoid any future breaches of competition law.
Penalties for individuals
What are the potential penalties for individuals involved in a cartel?
An individual convicted of the criminal cartel offence is liable on summary conviction to imprisonment for up to six months and/or a fine not exceeding the statutory maximum – up to £5,000 for offences committed before March 12 2015 and unlimited for offences committed after that date – and on conviction on indictment to imprisonment for up to five years and/or an unlimited fine. In addition, a director of a company found to have breached Chapter I and Article 101 may be disqualified from serving as a director for up to 15 years under the Company Directors Disqualification Act 1986.
Do the authorities take into account any penalties imposed in other jurisdictions?
No rules require the CMA to take into account any penalties imposed on individuals in other jurisdictions.
Is a company permitted to pay a penalty imposed on its employee?
Companies can pay a penalty imposed on an employee. However, provisions of company law may prevent such payments in certain circumstances.
Is a company permitted to continue to employ an employee involved in cartel conduct?
The CMA has no specific statutory powers to require the dismissal of an employee – although it can disqualify a director – involved in cartel conduct; a company may wish to consider whether dismissal would be appropriate of its own accord.
Private damages actions
Can private actions for damages be brought in your jurisdiction? If so, who may assert such actions?
Private actions for damages may be brought in the Competition Appeal Tribunal or the High Court for breach of Chapter I and Article 101 by any individual or business that has suffered loss as a result of an infringement of competition law.
What relief may be awarded to successful claimants (eg, damages, costs, injunctive relief or attorneys’ fees)?
Successful claimants are awarded damages – and costs in most cases – in both the High Court and the Competition Appeal Tribunal.
How are the amounts of any damages, costs or attorneys’ fees calculated?
Damages are compensatory and are calculated with reference to the victim’s loss. The United Kingdom has transposed the EU Damages Directive into UK law, which enables a defendant to claim a defence or a reduction of damages in circumstances where a claimant avoided or mitigated its loss by passing it onto another party.
Have there been any notable recent cases in which a private action was the subject of adjudication?
The United Kingdom is a leading forum for private actions in respect of infringements of competition law. Among the most significant private actions in train in the United Kingdom at the time of writing are the ongoing claims against MasterCard before the Competition Appeal Tribunal. These are follow-on damages actions as a result of the December 2007 decision of the European Commission – which was upheld by the European Court of Justice in a September 2014 decision – that MasterCard’s European Economic Area multilateral interchange fees were in breach of Article 101.
Can class actions be brought in your jurisdiction? If so, what is the procedure for such cases?
Class actions can be brought in the Competition Appeal Tribunal under the Competition Act 1998, which allows a representative to bring an action on behalf of two or more consumers. A new collective proceedings regime has been introduced by Schedule 8 of the Consumer Rights Act 2015, which amends the Competition Act 1998 and covers opt-in and opt-out actions. The Competition Appeal Tribunal will grant an order to authorise collective proceedings in circumstances where it is just and reasonable for the person commencing proceedings to act as representative of a specified class of claimants and where the claims are suitable to be brought in collective proceedings as they raise the same, similar or related issues of fact or law.
Immunity and leniency
Immunity and leniency programmes
Is an immunity and leniency programme available for companies? If so, how does it operate?
Differing types of protection are available for applicants depending on the specific circumstances of the application.
Type A immunity This is available where the undertaking is the first to apply and there is no pre-existing civil or criminal investigation into such activity. Type A immunity provides automatic immunity from civil fines for an undertaking and criminal immunity for all current and former employees and directors who cooperate with the Competition and Markets Authority (CMA). Cooperating individuals should also avoid director disqualification.
Type B immunity This is available where the undertaking is the first to apply, but there is already a pre-existing civil or criminal investigation into such activity. In such circumstances, the CMA retains discretion regarding whether to provide civil immunity to the undertaking and criminal immunity to current and former employees and directors who cooperate with the CMA. Cooperating individuals should also avoid director disqualification.
Type B leniency Where the CMA decides not to grant Type B immunity to an undertaking, it may still provide a reduction in any penalty. There is no limit to the level of reduction that may be granted. The CMA will consider whether it is in the public interest to grant criminal immunity on a blanket or individual basis. Cooperating individuals should also avoid director disqualification.
Type C leniency This is available to undertakings which are not the first to apply, but provide evidence of cartel activity before a statement of objections (SO) is issued – provided that such evidence genuinely advances the investigation. Recipients may be granted a reduction of up to 50% of any penalty. The CMA will not grant blanket criminal immunity, but may exercise its discretion to award immunity from prosecution for specific individuals. Cooperating individuals should also avoid director disqualification.
In addition to fulfilling the criteria above, an undertaking must:
- accept that it participated in cartel activity in breach of the law;
- provide the CMA with all information, documents and evidence available to it regarding the cartel activity;
- maintain continuous and complete cooperation throughout the investigation and until the conclusion of any action by the CMA as a result of the investigation;
- refrain from participating in the cartel from the time of disclosure of the cartel activity to the CMA – except as may be directed by the CMA); and
- (except in respect of Type C leniency) not have taken steps to coerce another undertaking to take part in the cartel.
Can the enforcement authority decline or withdraw leniency? If so, on what basis?
Once the CMA has issued an SO, it will not accept applications from undertakings for leniency. Once an individual is charged with a cartel offence, the CMA will not accept an immunity application from him or her. In exercising its discretion in respect of granting immunity or leniency in cases where the CMA has a pre-existing cartel investigation, the CMA may in some cases conclude that it will not accept any further leniency applications.
An applicant must adopt a constructive approach to assist the CMA in detecting, investigating and taking enforcement action against cartel conduct. If at any time the CMA finds that the applicant is not adopting a constructive approach or that there are unreasonable delays in supplying information or otherwise cooperating with its requirements, the CMA may withdraw leniency if its concerns are not adequately addressed after a meeting between the applicant and the senior responsible officer.
Are there benefits for cooperators that do not qualify for immunity? If so, how are these benefits determined?
Where an applicant qualifies for Type B or Type C leniency, reductions of its penalty are made at the discretion of the CMA. The key criterion for determining the level of a discount is the overall added value of the information, documents and evidence provided by an applicant. This will depend on:
- the stage at which the applicant comes forward;
- the information, documents and evidence already in the CMA’s possession; and
- the probative value of the information, documents and evidence provided.
The CMA will also consider the overall level of cooperation provided. Recipients of Type B or Type C leniency may receive a reduction of up to 100% or 50% of a penalty respectively.
What benefits (if any) are available for employees and former employees of a company that seeks leniency?
Is an immunity or leniency programme specifically available for individuals? If so, how does it operate?
Individuals can be granted immunity from criminal prosecution in the form of written notice issued by the CMA stating that, except in specified circumstances, no proceedings for a cartel offence of a specified description will be brought. The same conditions required for immunity and leniency must be satisfied.
Have there been any notable recent cases in which a leniency application was the subject of adjudication?
In three of its most recent cartel investigations into the supply of products to the furniture industry, the supply of steel water storage tanks and online sales of sport and entertainment merchandise concluded in August 2016, December 2016 and March 2017 respectively, the CMA granted complete immunity to one cartelist under its leniency policy and in each case reached settlement with the remaining parties. In addition to granting immunity to one cartelist in the water tanks cartel, the CMA granted one party Type C leniency and reduced its fine by 30% and another party a Type A immunity marker in relation to conduct it reported regarding a separate market and reduced its fine by 5%.
Is immunity from criminal prosecution available? If so, how and under what conditions is immunity granted?
What is the procedure for a leniency application?
An applicant’s adviser can approach the CMA on its behalf to ascertain whether Type A immunity is available on a no-names basis. To do this, he or she must have instructions to apply for Type A immunity if it is available and must confirm to the CMA that there is a concrete basis for a suspicion of cartel activity and that the undertaking has a genuine intention to confess.
To confirm the availability of immunity, the CMA requires sufficient information to determine whether there is a pre-existing civil or criminal investigation or a pre-existing applicant. If immunity is available, the adviser must identify the applicant which will receive a preliminary marker. Once the CMA receives a complete application package containing the information and evidence set out above, it will confirm the marker.
A similar approach may be made to obtain a marker for Type B immunity, although an undertaking is not required to make an immediate application if the CMA confirms that immunity is available. An applicant may also apply to obtain a marker in respect of Type B and Type C leniency. To receive a marker, the applicant must submit a complete application package to the CMA with information adding significant value to its investigation.
What is the typical timeframe for consideration of a leniency application?
There is no set amount of time between an applicant receiving a preliminary marker and the CMA confirming its marker and accepting its application once it receives a complete application package.
What information and evidence is required?
To apply for a preliminary marker, an applicant must disclose its identity and submit information concerning:
- the type of arrangement;
- affected product markets;
- evidence uncovered so far;
- names and locations of other involved undertakings and individuals; and
- geographic scope.
In addition, for the CMA to confirm its marker, the applicant must submit:
- a written or oral statement confirming and clarifying the information submitted to receive a preliminary marker;
- all relevant documentary evidence uncovered so far and its provenance; and
- the names of employees and directors who may give evidence.
What information and evidence is disclosed to subjects of the investigation other than the leniency applicant?
The information and evidence submitted by an applicant to apply for leniency are not disclosed to other undertakings at the time of its application. However, in the course of its investigation, it may be necessary for the CMA to disclose information received from an applicant.
What level of cooperation is required from applicants?
All applicants for immunity and leniency have a duty to maintain continuous and complete cooperation throughout the CMA’s investigation and any subsequent proceedings by the CMA. This requires applicants to engage positively, proactively and in a timely manner with the CMA to assist it in efficiently and effectively detecting, investigating and taking enforcement action against cartel conduct.
What confidentiality protection is offered to applicants?
The CMA recognises the importance of confidentiality for applicants; accordingly, the identity of an applicant is not normally revealed to other undertakings until an SO has been issued – although there is a risk that undertakings may infer the identity of an applicant from information disclosed during the investigation.
Private litigants have been increasingly concerted in seeking to obtain access to leniency documents, including applications and evidence. The European Court of Justice in Pfleiderer AG v Bundeskartellamt held that, in the absence of EU law, it is for the national courts of EU member states to determine on the basis of national law and on a case-by-case basis whether to order the disclosure of leniency documents by balancing the need to ensure effective public enforcement with the need to ensure the effective exercise of the right to full compensation; this decision has subsequently been followed by the UK High Court. However, the EU Damages Directive, transposed into UK law by virtue of regulations which came into force in March 2017, provides for absolute protection from disclosure for corporate leniency statements and settlement submissions.
Can the company apply for a marker? If so, under which conditions?
See above in respect of applying for leniency.