On 2 August 2017 the CMA published a consultation document to accompany its draft revised guidance on the appropriate amount of a penalty in respect of infringements of the prohibitions against anticompetitive agreements (Chapter I of the CA98 and Article 101 of the TFEU) and abuse of a dominant position (Chapter II of the CA98 and Article 102 of the TFEU). The consultation maintains the six-step fine calculation framework set out in the current guidance (published in September 2012) but proposes some limited changes to take account of recent decisional practice. The amendments aim to provide further transparency in the penalty-setting process and thereby increase certainty for businesses. They include:
(i) Starting point for fines. While the revised guidance retains 30 per cent of a company’s relevant turnover as the maximum starting point for the fine, it provides further detail as to how the CMA applies the percentage range in order to reflect the seriousness of the infringement, in particular in less severe cases.1 Although the CMA aims to avoid a prescriptive system, it will generally use a starting point of between 21 per cent and 30 per cent for the most serious types of infringement, including, from a Chapter I/Article 101 prohibition perspective, cartel activities (such as price fixing and market sharing) and other ‘by object’ infringements and, from a Chapter II/Article 102 prohibition perspective, conduct that is likely to have a serious exploitative or exclusionary effect (such as excessive and predatory pricing). A starting point of between 10 per cent and 20 per cent is likely to be appropriate for less serious ‘by object’ infringements and infringements ‘by effect’ under Chapter I/Article 101, and for infringing conduct under Chapter II/Article 102 that is less likely to be harmful. The CMA also proposes to clarify the factors it considers when deciding whether the starting point should be adjusted and that its seriousness assessment is made with regard to the specific circumstances of the case.
(ii) Adjustment for aggravating and mitigating factors. The CMA plans to include failure to comply with competition law following receipt of a warning or advisory letter in respect of the same or similar conduct as an additional example of a potential aggravating factor. The CMA also describes in the revised guidance several additional factors that it considers show a clear commitment to competition law compliance, such that it may reduce the fine. These include a company publishing a statement on its website regarding its commitment to comply with competition law, and reviewing compliance activity periodically and reporting this to the CMA. In addition, the CMA intends to include the provision of voluntary witness interviews and/or witness statements as an example of when it may make a reduction for co-operation with the investigation.
(iii) Adjustment for specific deterrence and proportionality. The revised guidance states that the CMA will typically consider profit after tax, net assets and dividends as reliable indicators of a company’s size and financial position and that it may consider any relevant indicator over a period of time (usually three years) in order to get an accurate picture of a company’s true financial position.
(iv) Reductions for leniency and settlement. The CMA intends to update the fining guidance to reflect the possibility of a discount where a company obtains approval for its voluntary redress scheme.2
Interested parties are invited to submit their views on the proposed revisions, and also to indicate whether there are any other areas of the current fining guidance that could usefully be clarified, by 27 September 2017.