On 1 April 2014, the Competition and Markets Authority (CMA) becomes 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. 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.

2. The scope of the cartel offence has been expanded

a. It is no longer necessary for the prosecution to prove that an individual was dishonest. Our separate Insight note explains how this will affect individuals in relation to shipping pools and consortia.

3. There are changes in procedure that could have a very significant effect

    a. Mergers:

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.

4. The CMA will inherit a significant caseload from day one across numerous sectors, including:

a. a healthcare product merger (Alliance Medical Limited/IBA Molecular UK Limited); b. a market study into residential property management services; c. a market investigation into supply and acquisition of energy in the UK; and completing the SME banking market study and deciding on whether to launch a full market investigation.

5. The CMA is only one of several competition regulators in the UK

a. Other regulators with concurrent powers in defined areas are: Ofwat, Ofgem, Ofcom, Monitor, ORR, UREGNI, FCA and CAA.

6. 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; iii. replacement of OFT and Competition Commission with CMA; and iiii. interplay with other legal compliance programmes within the company.

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.