From 1 April 2014, the Competition and Markets Authority (CMA) is the primary enforcer of competition law in the UK, replacing both the Office of Fair Trading and the Competition Commission.
How will this affect you and what should you do now?
1. There is little change of substantive competition law
a. The prohibitions on anti-competitive agreements and conduct remain the same, as do the Principles and Rules for Cooperation and Competition. b. Merger control jurisdiction and the substantive assessment of mergers remains the same. Merger notification remains voluntary in the UK. c. Individuals engaged in cartel activity may face prosecution, imprisonment or director disqualification. d. The NHS procurement rules contained in the ‘National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013’ are unaffected. e. Non-compliance with competition law may also breach a provider’s licence, carrying the risk of losing the licence.
2. There are changes in procedure that could have a very significant effect
i. The CMA has greater powers for stopping merging parties integrating the businesses and greater powers to penalise infringements of ‘hold separate orders’. They can even order the buyer to reverse actions already taken. ii. The CMA has new powers to gather information and penalise failure to provide information. Witnesses can be required to attend. Fines can be fixed at up to £30,000 or a daily penalty of up to £15,000.
b. Market investigations:
i. These will be subject to shorter time limits at every stage. This will impose a greater burden on parties to respond to lengthy questionnaires in short timescales. ii. Extended powers to require information from companies. iii. An expanded role for the Government (via the Secretary of State) to raise public interest issues.
c. Anti-trust investigations:
i. The CMA can require witnesses to submit to interviews. The CMA’s default position is that it will generally not be appropriate for a company’s legal adviser to be present during the interview of one of its employees. ii. It will be easier for the CMA to impose an injunction to prevent anti-competitive behaviour. iii. The CMA will be able to impose fines for non-compliance with an investigation.
3. There are only minor specific changes for the healthcare sector
a. For mergers between NHS foundation trusts and between NHS foundation trusts and other businesses, including NHS trusts, the CMA will inherit the OFT and CC’s roles in reviewing those mergers. Monitor will advise the CMA about the customer benefits of the merger, although such advice does not bind the CMA. b. Monitor will remain responsible for reviewing mergers between two or more NHS trusts and will provide advice on NHS trust mergers to the NHS Trust Development Authority. c. Mergers in the private healthcare sector fall to the CMA to review. d. Monitor retains its concurrent powers with the CMA to carry out market investigation references and investigate anti-competitive agreements and conduct in relation to the provision of healthcare services in England.
4. What you should do now
a. Review compliance programmes (both as regards law and dealing with investigations) to take account of:
i. changes to the Cartel Offence; ii. CMA’s expanded procedural powers; and iii. The replacement of OFT and the Competition Commission with the CMA.
b. Take the opportunity to refresh compliance training for all staff, including senior management and consider conducting a competition audit to assess preparedness in the event of an investigation.
c. Review procedures for entering into corporate deals (such as mergers, acquisitions, takeovers, acquisition of minority interests) and commercial deals (licensing, distribution, agency, joint ventures) to ensure competition law is considered at the earliest possible stage.