UK: Summary of Cartel Enforcement Action
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This article provides an overview of cartel enforcement action in the United Kingdom during the period from March 2020 to March 2021, including judgments and civil enforcement by the UK Competition and Markets Authority. It also highlights major developments following the United Kingdom’s exit from the European Union and developments regarding the digital sector.
- UK civil enforcement under section 2 of the Competition Act 1998 or article 101 of the Treaty on the Functioning of the European Union
- Recent competition director disqualification undertakings and judicial proceedings
- Antitrust regulatory developments in the digital sector
- Developments following the United Kingdom’s departure from the European Union on 31 January 2020 and the end of the transitional period on 31 December 2020.
Referenced in this article
- Competition and Markets Authority
- Competition Appeal Tribunal
- Section 2 of the Competition Act 1998
- Article 101 of the Treaty on the Functioning of the European Union
- Chapter I of the Competition Act 1998
- Multilateral Interchange Fees damages litigation
- Allianz Global Investors GmbH and ors v Barclays Bank plc and ors  EWHC 399 (Comm)
- Paroxetine litigation
- Digital Markets Unit
Following Brexit on 31 January 2020, the transition period came to an end on 31 December 2020. The UK Competition and Markets Authority (CMA) is the primary enforcement authority in the United Kingdom for civil cartels under the Chapter I prohibition under section 2 of the Competition Act 1998 (CA98) and for criminal cartels under section 188 of the Enterprise Act 2002 (EA).
Criminal cartels include agreements relating to price-fixing, the sharing of markets or customers, limiting production or supply, or bid rigging. Breaches of Chapter I can give rise to fines of up to 10 per cent of global group turnover for a company, and disqualification from serving as a director for up to 15 years for an individual. Participation in a criminal cartel may also give rise to the imposition of a five-year prison sentence or unlimited fines (or both), for an individual, and disqualification from serving as a director for up to 15 years.
Until the end of the transition period, the CMA was also the primary enforcer in the United Kingdom with regard to article 101 of the Treaty on the Functioning of the European Union (TFEU).
On 23 March 2021, the CMA published its annual plan for 2021 to 2022. Following the end of the transition period on 31 December 2020, the CMA stated that it was ‘ready to launch complex cartel and antirust cases and merger investigations with a global dimension that would have previously been reserved to the European Commission’.
The CMA expects a significant increase in its caseload. This will have major implications for the work of the CMA and how it allocates resources, which may ‘limit’ the CMA’s discretion in the number of new projects it can launch in the coming year.
In this context, the CMA has said it will continue to fulfil its duties, in particular by:
- protecting consumers and driving recovery during and after the covid-19 pandemic;
- taking its place as a global competition authority;
- fostering effective competition in digital markets; and
- supporting the transition to a low carbon economy.
Civil enforcement under article 101 and Chapter I
In the second half of 2020 and in early 2021, the CMA issued infringement decisions in the musical instruments and equipment industry, the construction industry, the pharmaceutical industry, the comparison websites industry and the private eye care industry. Most decisions were issued pursuant to settlement agreements by all or most of the undertakings under investigation.
The period was also an active one for cartel enforcement by the UK communications regulator, the Office of Communications (Ofcom), and the UK gas and electricity regulator, the Office of Gas and Electricity Markets (Ofgem), which have concurrent competition law powers with the CMA.
In 2021, Ofcom decided to close one of its investigations and to issue a statement of objections (SO) in a second ongoing Chapter I case on 23 October 2020. In the latter case, Ofcom has alleged that Motora and Sepura infringed Chapter I of the CA98 and article 101 of the TFEU. It has alleged that the parties to the infringements exchanged competitively sensitive information relating to future pricing intentions in connection with a procurement exercise run by the Police ICT Company in 2018. The procurement exercise pertained to devices, accessories and related services for use on the Airwave network, a private network used by UK emergency services.
Supreme Court proceedings
Damages actions against Mastercard and Visa payment schemes
On 19 December 2007, the European Commission (the Commission) issued an infringement decision (the MIF decision) against Mastercard that its European Economic Area (EEA) multilateral interchange fees (MIFs), governing fee payments between banks relating to transactions made using payment cards, breached article 101 of the TFEU. Its decision was upheld by the General Court (GC) on 24 May 2012 and the Court of Justice of the European Union (CJEU) (with the GC and the European courts) on 11 September 2014.
On 14 July 2016, the Competition Appeal Tribunal (CAT) found for Sainsbury’s, a UK retailer, in a stand-alone damages action against Mastercard, in relation to losses suffered by Sainsbury’s as a result of Mastercard’s UK MIF. The CAT held that the Mastercard UK MIF was a restriction on competition by effect under Chapter I and article 101. Accordingly, Sainsbury’s was entitled to recover an amount equivalent to the overcharge paid by it during the claim period, and it was awarded £68.6 million plus interest in damages. Mastercard appealed the CAT’s judgment to the Court of Appeal.
On 30 January 2017, in a separate but similar stand-alone action, the High Court of England and Wales (the High Court) rejected a stand-alone action for damages brought by several other UK high street retailers (namely, Asda, Arcadia, Next, B&Q, Comet, New Look, Iceland, Argos, WM Morrisons and Debenhams), ruling that Mastercard’s UK, Irish and EEA MIFs were not restrictive of competition under Chapter I and article 101. The High Court held that it was not bound by the CAT’s findings of law or fact in the separate Sainsbury’s proceedings. The retailers appealed the judgment to the Court of Appeal.
In other separate but related proceedings, Sainsbury’s and, separately, Asda, Argos and Morrisons (with a number of other UK retailers that have since settled) brought a stand-alone damages action under Chapter I of the CA98 and article 101 of the TFEU against Visa in respect of Visa’s UK MIFs. On 30 November 2017, the High Court held that Visa’s UK MIFs did not restrict competition for the purposes of Chapter I and article 101(1). Both the retailers and Visa appealed aspects of the judgment to the Court of Appeal.
The appeals relating to all the MIF stand-alone judgments (namely, the CAT’s and the High Court’s Mastercard MIF judgments and the High Court’s Visa MIF judgment) were heard jointly by the Court of Appeal in April 2018. On 4 July 2018, the Court of Appeal determined that it was bound to follow the CJEU’s 2012 decision against Mastercard and held that Visa’s and Mastercard’s setting of their UK MIFs was a restriction of competition under article 101(1). The case was remitted by the Court of Appeal to the CAT for reconsideration of the possible application of article 101(3) and for the assessment of the quantum of the claim.
Visa and Mastercard appealed the Court of Appeal’s judgment to the Supreme Court, while some of the retailers appealed certain aspects of the judgment. The Supreme Court heard the appeals in January 2020. As it had done with regard to the Court of Appeal proceedings, the Commission made written submissions and appeared before the Court to make oral submissions. The Supreme Court handed down its judgment on 17 June 2020.
The Supreme Court rejected all the appeals by Visa and Mastercard and upheld the finding of the Court of Appeal that the default UK MIFs charged within the Visa and Mastercard payment card schemes constituted an unlawful restriction of competition under article 101(1) and Chapter I. Prior to the relevant proceedings, there had been no English or European ruling that Visa’s MIF was a restriction of competition.
The Supreme Court’s judgment has significant implications for the payment card schemes that now have a competition infringement finding against them in relation to their MIFs from the highest court in the United Kingdom. The Court’s judgment was eagerly awaited, including by the scores of claimants whose proceedings had been stayed pending the outcome of those lead cases.
The appeals turned on points of material importance in competition law damages claims and are of a much wider significance, including with regard to a collective damages action brought against Mastercard on behalf of UK consumers under the UK opt-out regime (see below with regard to the proceedings in Walter Hugh Merricks CBE v Mastercard Inc and Others).
The appeals to the Supreme Court tested:
- the circumstances in which the English courts are bound by judgments of the European Courts;
- whether the standard of proof is reserved for national law;
- the type of evidence that is required to meet the standard of proof under English law with regard to article 101(3) of the TFEU;
- the basis upon which an agreement that is restrictive of competition under article 101(1) of the TFEU can be exempted under article 101(3), provided it satisfies certain conditions;
- how damages are to be assessed; and
- the principle of finality in litigation.
In terms of the binding nature of judgments by the European Courts, the Supreme Court determined that whether a judgment of the European Courts is binding depends upon whether the findings upon which that decision is based are materially distinguishable from those made or accepted in the case before the English Courts. The Supreme Court said that in its judgment, the essential factual basis upon which the European Courts held that there was a restriction on competition with regard to the relevant Mastercard MIF was mirrored in the proceedings.
In relation to the question of whether an agreement, decision or concerted practice that is restrictive of competition is exempted from the prohibition imposed by article 101(1) of the TFEU, the Supreme Court rejected Visa’s argument on whether consumers received a fair share of the benefits resulting from the restriction of competition (in this case, the MIF). It determined that for this condition to be satisfied in the two-sided market, the disadvantages suffered by the merchants must be counterbalanced by the advantages benefiting them, the merchants. Accordingly, any resulting benefits to cardholders from the MIF are not relevant.
In relation to the assessment of damages, the matter at issue concerned the degree of precision that is required in the quantification of mitigation of loss where a defendant to a claim for damages arising out of a breach of competition law asserts that the claimant has mitigated its loss through the ‘passing on’ of all or part of an overcharge to its own customers. The Supreme Court determined that the law requires no greater precision in the quantification of pass-on from the defendant than from a claimant seeking to quantify damages. The appeals were remitted to the CAT for reconsideration of the evidence on the assessment of quantum of Sainsbury’s respective claims against Visa and Mastercard.
In separate proceedings in 2015, Dixons and Europcar brought a separate follow-on claim for damages against Mastercard, based on the Commission’s MIF decision, for the period from 22 May 1992 to 21 June 2008. These follow-on proceedings are distinct from the stand-alone proceedings against Mastercard (and Visa) referred to above.
In these proceedings, Dixons and Europcar alleged that they suffered damage as a result of the UK MIF, but that the level of the UK MIF resulted from the EEA MIF and was, therefore, caused by the infringement found by the Commission in its MIF decision against Mastercard. Mastercard applied for summary judgment, arguing that the actions were time-barred in respect of losses during the period between 1992 and 20 June 1997.
On 14 February 2019, the CAT handed down a judgment on a preliminary issue relating to a limitation in follow-on actions, ruling that the retailers’ claims were not time-barred. As a result, it dismissed Mastercard’s application for summary judgment. Mastercard sought permission to appeal the CAT’s judgment.
On 9 April 2019, the CAT granted Mastercard permission to appeal its judgment in respect of the question of whether the retailers’ claims were time-barred. The appeal was heard by the Court of Appeal in April 2020, and the judgment was handed down on 22 May 2020. The Court of Appeal considered that the CAT had erred in its interpretation of the relevant limitation provisions when it allowed claims to proceed against Mastercard. It, therefore, granted Mastercard’s appeal and overturned the decision of the CAT.
However, the Court of Appeal refused to grant Mastercard’s application for a summary judgment because the CAT had not held a hearing to determine if Dixons knew enough to investigate the company’s conduct before 20 June 1997. The judgment confirmed that the CAT should have first considered if the claimants were aware of the need to investigate, and the parties must, therefore, debate the claim period before the CAT once again, this time with factual evidence and disclosure.
In addition to the UK damages actions by retailers, in September 2016, a collective damages action was brought against Mastercard on behalf of UK consumers under the opt-out regime in section 47B of the CA98 in Walter Hugh Merricks CBE v Mastercard Inc and Others. On 21 July 2017, the CAT held that the claim was not eligible for inclusion in collective proceedings.
On 16 April 2019, the Court of Appeal upheld an appeal against the CAT’s judgment, finding that the CAT had erred in refusing to grant a collective proceedings order (CPO). Accordingly, it remitted the CPO application back to the CAT for rehearing. On 24 July 2019, Mastercard was granted permission to appeal the judgment to the Supreme Court.
On 11 December 2020, the Supreme Court handed down its judgment, dismissing Mastercard’s appeal in a three-to-two ruling. The action concerns the largest collective claim in the United Kingdom to date and has reopened the possibility of a claim by 46.2 million individuals for alleged losses incurred over 16 years across all retail sectors.
The judgment held that the complexity of the distribution of damages and the risk of over- (or under-) compensation did not necessarily constitute a bar to certification. A central purpose of the power to award aggregate damages in collective proceedings is to avoid the need for individual assessment of loss. In particular, there will be cases where the mechanics of approximating individual loss are so difficult and disproportionate that some other method may be more reasonable, fair and just. In addition, the diversity of consumers, retail business and the extent of passing-on of overcharges to consumers were also not necessarily a bar to certification.
In this regard, the correct test is whether the class was more suitable for collective proceedings than individual actions. In particular, if difficulties identified with the claims forming the basis of the collective proceedings were themselves insufficient to deny a trial to an individual claimant who could show an arguable case to have suffered some loss, then those same difficulties should not be sufficient to lead to a denial of certification for collective proceedings. The case will now return to the CAT, which will apply the prescribed test as determined by the Supreme Court.
Although the majority judgment has provided clarification on the correct approach for the CAT to take when considering whether claims are suitable for collective proceedings, the dissenting judges cautioned that this approach has the potential to ‘very significantly diminish the role and utility of the certification safeguard’. With several classes due to be considered for certification in 2021, this year will continue to shape the future of the UK class action regime.
High Court and CAT proceedings
Damages actions against Barclays, UBS, HSBC, etc
On 25 February 2021, the High Court dismissed a strike-out application brought by claimant groups who are pursuing follow-on damages claims a number of banks, including Barclays, Citigroup, Mitsubishi UFJ Financial Group, HSBC and UBS. The original claim related to loss suffered as a result of the banks’ alleged manipulation of FX rates, which the investment and pension funds allege forced them to pay inflated prices to buy and artificially low prices to sell. The defendants had argued that the investment funds mitigated part of their losses by passing them on to others (ie, the investors in the funds), which the claimant groups subsequently applied to strike out.
The Court ruled that that the pass-on defence succeeded because the majority of the claimants are trusts, and under English law a trust beneficiary can claim its own damages when it has suffered a loss because of a breach of competition rules.
‘Pay for delay’ in Paroxetine case
On 30 January 2020, the CJEU handed down a preliminary ruling on a number of questions referred to it by the CAT in relation to five appeals brought by six pharmaceutical companies challenging the CMA’s infringement decision fining the companies for agreeing to delay generic entry into the market for the drug paroxetine.
In February 2016, the CMA imposed fines totalling £44.99 million on GlaxoSmithKline (GSK), Alphapharm Ltd and Generics (UK) Ltd under Chapter I of the CA98 and article 101 of the TFEU with regard to pay-for-delay arrangements in relation to generic paroxetine. It found that, between 2001 and 2004, GSK (the originator supplier of branded paroxetine) had agreed to make payments and other value transfers totalling more than £50 million to two generic manufacturers (Alphapharm and Generics (UK)), which were aimed at delaying the generic firms’ potential UK entry with generic versions of paroxetine.
GSK, Generics (UK), Xellia and Alpharma, Actavis UK and Merck appealed to the CAT. As there were significant overlaps between the five appeals of the CMA’s infringement decision, the CAT heard them together and, on 8 March 2018, referred a number of the questions relating to pay-for-delay in the context of patent disputes and patent litigation to the CJEU for a preliminary ruling, while ruling on some of the other points in favour of the CMA.
In this regard, the CAT dismissed GSK, Generics (UK), Actavis and Xellia/Alpharma’s argument that the CMA’s infringement decision erred in finding that the agreements did not benefit from the exemption under the Competition Act 1998 (Land and Vertical Agreements Exclusion) Order 2000. In addition, the Tribunal dismissed GSK’s argument that the infringement decision erred in finding that the agreements did not benefit from an exemption under Commission Regulation (EC) No. 2790/1999 (the Vertical Block Exemption Regulation) or from individual exemption.
On 30 January 2020, the CJEU ruled, among other points, that a patent settlement agreement between a manufacturer of originator medicines and a manufacturer of generic medicines (who are potential competitors, whereby the generic manufacturer commits not to enter the market or not to challenge the patent in return for a transfer of value) has the object of restricting competition if it is clear that the transfer of value can have no explanation other than the commercial interest of the parties to the agreement being not to engage in competition on the merits, unless the relevant settlement agreement is accompanied by pro-competitive effects.
This ruling has already influenced the outcome of similar cases. For example, the CJEU applied principles established in this case in its Lundbeck decisions of 25 March 2021, confirming that not only should a restriction by object of article 101 be interpreted narrowly, but also that patent settlement agreements cannot automatically be deemed a restriction by object, even if they include a value transfer from the originator to the generic manufacturer. Notwithstanding this, where value transfers cannot have any justification other than as a reflection of the commercial interests of the parties not to compete, the agreement can be considered to restrict competition by object.
Subsequently, on 10 May 2021, the CAT upheld the CMA’s decision and unanimously dismissed all the pharmaceutical companies’ remaining grounds of appeal in respect of the infringements. However, it reduced the fines imposed by the CMA by £27.1 million owing to various factors, including uncertainty of the law at the time and the novelty of the case.
Following the CJEU’s judgment, the CAT rejected the argument that Alphapharm and Generics UK were not potential competitors to GSK since both conditions were satisfied, namely that the generic company must have a firm intention and inherent ability to enter the market; and entry must not face insurmountable barriers.
Furthermore, the CAT stated that the approach for assessing whether a settlement agreement was a by object restriction was ‘not a term of art’, and found, in principle, that each agreement was a restriction by object. As a result of this decision, the Department of Health and Social Care will now be able to seek follow-on damages in the Courts.
Investigations in the musical instruments and equipment industry
On 17 April 2018, the CMA announced that it had opened five investigations concerning alleged anticompetitive agreements or concerted practices in relation to musical instruments and equipment. The investigations have progressed independently from one another.
Synthesisers and hi-tech equipment
On 24 March 2020, the CMA issued separate SOs, reaching a preliminary conclusion that two suppliers of electronic drum kits and hi-tech music equipment and synthesisers to UK retailers, Roland (UK) Limited and Korg UK Limited, had engaged in resale price maintenance by restricting online discounting for their products. The CMA said that both companies had made use of software services that enabled online price monitoring.
On 9 July 2020, the CMA issued an infringement decision, fining Korg £1.5 million. The fine included a 20 per cent discount to reflect savings to admission and cooperation with the CMA under a settlement agreement.
On 22 July 2020, the CMA issued a fine against Roland of over £4 million; however, Roland appealed the CMA’s decision in respect of the level of the fine, even though it had agreed to pay it as part of its settlement with the CMA.
On 19 April 2021, the CAT handed down its judgment, dismissing Roland’s arguments that its conduct was not sufficiently serious to justify the level of the fine and that the CMA should have awarded it a higher leniency discount. The CAT also agreed with the CMA that, by appealing against the CMA’s decision, Roland had breached its settlement with the CMA to accept a lower fine in return for agreeing not to appeal, and held that, as a result, Roland should lose the benefit of its 20 per cent settlement discount. Accordingly, Roland’s fine was increased to just over £5 million – an increase of more than £1 million.
Digital pianos, keyboards and guitars
On 17 July 2020, the CMA announced it had issued an infringement finding that Guitar, Amp & Keyboard Centre Ltd and GAK.co.uk (Holdings) Limited (GAK) (a retailer of musical instruments) had engaged in resale price maintenance (RPM) with Yamaha Music Europe GmbH. It imposed a fine of £278,945 which included a 20 per cent discount to reflect savings owing to the companies’ admission and their cooperation with the CMA under a settlement agreement. This is the first time the CMA has taken enforcement action against a retailer in an RPM case.
Furthermore, while the CMA had reason to suspect that other resellers with which Yamaha worked may also have engaged in RPM, the CMA focused its investigation on GAK, primarily because GAK had failed to address the CMA’s concerns regarding possible RPM conduct after receiving an advisory letter from the CMA in 2015.
Further to its decisions and ongoing investigations in the musical instrument sector, the CMA issued an open letter to the industry warning participants against engaging in RPM and issued warning letters to almost 70 manufacturers and retailers across the sector that the CMA suspects their online pricing arrangements may have been illegal. In tandem, the CMA also launched its own in-house price monitoring tool, which would allow it to automatically monitor price levels among musical instrument retailers.
Investigations in the construction industry
In 2020, the CMA took enforcement action in relation to a number of companies operating in the supply of goods and services to the construction industry. This followed a statement in March 2019 by Andrea Coscelli, the CMA’s chief executive, that the CMA ‘is concerned it is seeing a lot of evidence of anticompetitive conduct in the construction industry’.
On 27 March 2019, the CMA issued an SO in which it provisionally found that three suppliers of rolled lead had entered into a market sharing agreement. The CMA reached a preliminary conclusion that the undertakings had colluded on pricing, exchanged commercially sensitive information and shared customers, and collectively refused to supply another company that threatened to disrupt the alleged market sharing arrangement.
On 12 June 2020, the CMA issued a supplementary SO to three firms that, together, account for about 90 per cent of UK rolled lead roofing supplies. According to the CMA’s revised provisional view, there was not a single overall cartel arrangement, but rather four individual arrangements. Accordingly, on 4 November 2020, it issued a decision finding that the suppliers had infringed competition law by entering into four anticompetitive agreements. The CMA imposed fines totalling over £9 million, including settlement discounts.
On 9 April 2019, the CMA issued an SO to three suppliers of groundworks products to the construction industry. On 17 December 2020, it issued an infringement decision that the suppliers had coordinated their commercial behaviour, in particular by sharing confidential information on future pricing and commercial strategy and by coordinating their commercial activities.
The CMA levied fines of over £15 million on two suppliers. A third supplier was not fined since it brought the illegal activity to the CMA’s attention and cooperated with the investigation under the CMA’s leniency programme.
Pre-cast concrete drainage products
On 23 October 2019, the CMA issued an infringement decision and imposed fines totalling £36 million on three suppliers of pre-cast concrete drainage products, finding that the companies had infringed competition law by entering into agreements to fix or coordinate prices and share the market.
As part of the CMA’s settlement process, two of the suppliers under investigation admitted to participating in the alleged cartel and agreed to pay fines. A third company under investigation, FP McCann Limited, was not party to the settlement and filed an appeal on 20 December 2019 with the CAT against the CMA’s infringement decision.
On 22 December 2020, the CAT unanimously rejected FPM’s appeal and upheld the CMA’s decision to impose a penalty of £25 million on FPM for participating in the illegal cartel, reflecting the seriousness of the infringement.
In addition to its infringement decision, on 18 March 2021, the CMA secured legally binding disqualification undertakings from two directors.
Investigations in the pharmaceutical industry
In 2020 and 2021, the CMA progressed a number of ongoing investigations in the pharmaceuticals sector. In setting out its annual plan for 2021 to 2022, the CMA emphasised its continuing focus on the sector, noting that ‘we will continue our work on cases in the UK pharmaceutical sector, to ensure that the NHS does not pay significantly more than it should for essential medicines and treatments.’
On 23 May 2019, the CMA issued an SO alleging that four pharmaceutical companies had infringed competition law by entering into anticompetitive market sharing agreements in relation to the supply of prochlorperazine tablets, an anti-nausea drug.
On 22 January 2021, the CMA announced that it had decided to close on grounds of administrative priorities its investigation of whether alleged separate agreements between each of: (1) Alliance Pharmaceuticals and Focus; and (2) Focus, Lexon and Medreich in relation to the supply of prochlorperazine 3 milligram buccal tablets in the United Kingdom in themselves individually infringed Chapter I of the CA98. The CMA continues its investigation on whether an alleged overarching agreement between the four parties in relation to the supply of prochlorperazine in the UK breached Chapter I.
On 25 July 2019, the CMA issued an SO alleging that three pharmaceutical companies had participated in anticompetitive agreements or concerted practices in relation to the supply of nitrofurantoin capsules, an antibiotic commonly used to treat urinary tract infections. According to the CMA, the only two suppliers of nitrofurantoin capsules had entered into arrangements under which a pharmaceutical wholesaler would buy equal volumes of the drug from each of them, giving rise to market sharing. The investigation is still ongoing.
On 3 October 2019, the CMA announced that it had issued an SO to three pharmaceutical companies. It provisionally concluded that, in 2016, the pharmaceutical company Aspen had unlawfully agreed to pay two other firms, Amilco and Tiofarma, to stay out of the UK market for fludrocortisone acetate tablets, a medicine used to treat primary or secondary adrenal insufficiency. All three companies admitted to breaching competition law by entering into this agreement.
On 9 July 2020, the CMA issued its infringement decision finding that the three suppliers infringed UK and EU competition law, levying a fine of £2.3 million. As well as the fines, Aspen approached the CMA in 2019 and agreed to pay the NHS £8 million to help resolve the CMA’s competition concerns in relation to fludrocortisone.
In addition, the CMA also secured a disqualification undertaking from the director of Amilco on 1 June 2020.
On 12 February 2020, the CMA announced that it had issued a single supplementary SO in relation to three separate investigations concerning hydrocortisone tablets. The CMA’s procedural approach is without precedent.
The CMA had previously conducted three separate investigations concerning:
- alleged excessive and unfair pricing by Actavis UK (formerly Auden Mckenzie (Auden)) under Chapter II of the CA98 and article 102 of the TFEU;
- an alleged pay-for-delay agreement between Actavis/Auden and Concordia under Chapter I and article 101 and alleged exclusionary conduct by Actavis/Auden under Chapter II and article 102; and
- an alleged pay-for-delay agreement between Auden and Waymade under Chapter I and article 101 and alleged abusive conduct by Auden under Chapter II and article 102.
The CMA had issued three separate SOs in 2017 and 2019 in the respective investigations. In (1), Actavis/Auden responded to the SO, and the CMA proceeded to a draft penalty statement; in (2), the parties responded to the SO and attended oral hearings; and in (3), the CMA decided that the recipients of the SO need not respond to it.
In bringing the three investigations together and issuing a single SO on 12 February 2020, the CMA stated that, in view of the alleged ‘interrelationship of the facts and allegations in the three hydrocortisone investigations, the CMA brought them together and revised certain aspects of its provisional findings in the respective statements of objections’. The investigation is still ongoing.
On 4 March 2020, the CMA issued two separate decisions in respect of infringements relating to nortriptyline tablets, an anti-depressant.
The first decision found market sharing. The CMA determined that two pharmaceutical suppliers, Auden and King Pharmaceuticals (King), had shared between them the supply of nortriptyline tablets to a large pharmaceutical wholesaler, and that the two firms had colluded to fix quantities and prices. Both pharmaceutical companies admitted to the infringement. As part of the settlement, Auden and King received reduced fines, and Auden agreed to make a payment of £1 million to the NHS in consideration for damages the NHS was said to have suffered as a result of the infringements.
On 4 May 2020, a former director and joint owner of Auden filed an appeal with the CAT against the CMA’s decision; however, on 3 June 2020, the president of the CAT made an order granting the appellant permission to withdraw the appeal. The decision to withdraw was made at the same time as the individual’s admission of anti-competitive behaviour in the fludrocortisone market.
The second decision concerned an information exchange. The CMA found that three pharmaceutical companies, King, Lexon (UK) Ltd (Lexon) and Alissa Healthcare Research Ltd (Alissa), had shared commercially sensitive information concerning prices, volumes and market entry plans. Two of them, King and Alissa, admitted to the infringement and received reduced fines as a result. The third company, Lexon, did not admit to the infringement and, on 11 May 2020, it filed an appeal with the CAT against the CMA’s infringement decision. On 25 February 2021, the CAT upheld the CMA’s finding that Lexon broke competition law and dismissed Lexon’s appeal.
In respect of the second information sharing infringement decision, the CMA secured a disqualification undertaking against a director of King on 20 December 2019, the CMA also secured disqualification undertakings from a former director of Auden on 1 June 2020 and from a director of Alissa on 21 August 2020 (which was subsequently reversed on 17 December 2020).
On 27 August 2020, the CMA issued proceedings in the High Court seeking the disqualification of a director of Lexon in connection with the CMA’s second decision dated 4 March 2020. The disqualification proceedings were put on hold pending Lexon’s appeal of the CMA’s second decision. Following the CAT’s decision, upholding the CMA’s second infringement decision, the High Court will consider whether a competition disqualification order (CDO) is appropriate. This would require a determination by the Court that the individual’s conduct as a director makes him unfit to be concerned in the management of a company.
On 9 June 2020, the CMA issued an SO following an investigation into the provision of ophthalmology services in the private healthcare sector. On 1 July 2020, it issued an infringement decision finding that Spire Healthcare Limited and Spire Healthcare Group plc (Spire) and seven consultant ophthalmologists had broken competition law by taking part in illegal price-fixing of initial consultation fees for self-pay patients at a hospital in the north of England.
The arrangement was initiated following a dinner, organised by the hospital’s management and attended by five of the seven ophthalmologists, at which the topic of fees was raised. Following the dinner, a Spire employee sent an email to the ophthalmologists to suggest that the price for initial consultations for self-pay patients be set at £200 going forward.
The CMA imposed fines totalling over £1.2 million on Spire and six of the ophthalmologists, which included a 20 per cent settlement discount to reflect their admission of their role in the infringement and their agreement to cooperate with the CMA. One ophthalmologist who brought the illegal activity to the CMA’s attention under the CMA’s leniency programme was not fine.
On 2 November 2018, the CMA issued an SO against BGL (Holdings) Limited, BGL Group Limited, BISL Limited and Compare the Market Limited (BGL) as part of its investigation into clauses used by the ComparetheMarket comparison site in its contracts that stop home insurers from quoting lower prices on rival sites and other channels. The investigation continued the CMA’s work in the sector following a market study into digital comparison tools, showing that many people visit more than one comparison site as they shop around for the best deals.
Subsequently, on 19 November 2020, the CMA issued an infringement decision and imposed a financial penalty of £17.9 million against the legal entities comprising the undertaking referred to as BGL, on a joint and several basis. The CMA found that the network of wide most-favoured-nation clauses had the effect of reducing price competition, restricting the ability of a website’s rival websites to expand, and reducing price competition between home insurers competing on price comparison websites. On 3 February 2021, ComparetheMarket filed an appeal in the CAT against the CMA’s infringement decision.
Residential estate agency services
Further to an infringement decision on 17 December 2019, finding that four estate agents had infringed competition law by agreeing to fix and maintain a minimum level of commission charged for the provision of residential estate agency services, the CMA secured CDOs against three directors on 30 April 2019, 15 June 2020 and 3 July 2020 respectively.
Other civil enforcement action
In the second half of 2020, the CMA also launched investigations into suspected anticompetitive arrangements into replica football shirts and the domestic lighting sector. Those are in addition to the CMA’s current investigations into the Atlantic Joint Business Agreement, the supply of construction services and the financial services sector.
Competition director disqualification orders
In 2002, the EA gave the UK competition authorities the power to seek CDOs pursuant to which directors of companies found to have participated in a criminal cartel (cartel offence) may be disqualified from being a director for up to 15 years. Under the EA, participation in a cartel offence may also give rise to the imposition of a five-year prison sentence, unlimited fines, or both.
However, this power was essentially unused until a change in the law, which provided that, for conduct after 1 April 2014, it was no longer necessary for the CMA to prove that an individual had acted ‘dishonestly’ in committing the cartel offence to secure a CDO.
The CMA has demonstrated its determination to pursue CDOs by going after directors who participated in a cartel offence found by the CMA in its infringement decisions. For example, on 10 March 2021, it secured the disqualification of three company directors, after finding that they had engaged in a cartel offence by forming a cartel of rolled lead suppliers in the construction industry. On 18 March 2021, the CMA secured legally binding disqualification undertakings in connection with its infringement decision against suppliers of pre-cast concrete drainage products. The CMA secured CDOs against two individuals pursuant to which they were prohibited from acting as a director of a company for a period of 12 and 11 years respectively. These are the longest periods for CDOs secured by the CMA to date.
On 17 December 2020, the High Court granted a director of Alissa who was subject to a competition disqualification undertaking permission to continue to act as director in the particular circumstances of the case. In September 2020, he had given a disqualification undertaking not to act as a director of any UK company for two years as a result of his involvement in infringements of Chapter I of the CA98 and article 101 of the TFEU in relation to the exchange of commercially sensitive information.
In light of several factors, including the essential nature of the Alissa’s business as a pharmaceutical supplier (in particular during the covid-19 pandemic) and the fact that there was no one suitable to replace the director, the CMA did not oppose the director’s application for permission to continue to act as director.
Furthermore, High Court proceedings initiated against a director of Lexon on 27 August 2020 are ongoing following a decision by the CAT on 25 February 2021 to uphold the CMA’s infringement decision against Lexon.
In July 2020, the CMA published a detailed market study into online platforms and digital advertising, concluding that existing competition law tools were not sufficient to regulate the major online platforms. The CMA report concluded that the concerns identified in those markets are so wide ranging and self-reinforcing that the CMA’s existing powers are not sufficient to address them.
The CMA accordingly recommended:
- the establishment of a Digital Markets Unit (DMU), which will designate digital platforms that have ‘strategic market status’ (SMS);
- the establishment of an enforceable code of conduct to govern the behaviour of platforms designated as having SMS; and
- the grant of powers to the DMU that will enable it to make a range of pro-competitive interventions, including the ability to break up platforms.
Although the CMA did not make reference to a market investigation, it noted that it was actively considering possible enforcement cases in the digital sector. The government responded to those proposals in November 2020 and announced that it would set up the DMU to oversee an ex ante, pro-competition regime for digital platforms.
Moreover, on 9 February 2021 the CMA published an updated Digital Markets Strategy, which was originally issued in July 2019. The updated strategy takes into account recent policy developments, including the DMU launch.
The DMU was officially established on 7 April 2021 on a temporary and non-statutory basis to focus on operationalising and preparing for the new regime. This involves building teams with the relevant capabilities, working closely with government to provide key insights to inform decisions about the new regime, and evidence gathering on digital markets. The non-statutory DMU is an interim solution pending government consultations that will take place throughout 2021.
In this regard, the CEO of the CMA, Andrea Coscelli, has announced that: ‘[t]he government is […] working on the draft legislation, planning to come out with a consultation document in the next couple of months. And then introduce draft legislation as soon as possible’. The CMA’s ultimate aim for the DMU will be to monitor competition in digital markets more widely.
While the CMA works with the government on these new proposals (which are intended to complement its current enforcement powers), the CMA will continue to use its existing competition powers to conduct investigations in the digital sector.
Particularly as a result of Brexit, the CMA plans to open a number of independent investigations in parallel to the Commission where the cases also include the UK market. Accordingly, Andrea Coscelli has made a further statement saying that the CMA is ‘actively scanning the players, the complaints we have received, the cases that others are doing, what could be done in parallel with others, where are the gaps in the work the European Commission is doing’. In this regard, the CMA expects to open more cases in 2021, signalling a tougher approach to the digital sector in general.
In an endeavour to assist companies in dealing with the covid-19 pandemic, Parliament adopted the Dairy Produce Order on 2 May 2020, which temporarily relaxed the application of UK competition law to certain types of cooperation between either dairy produce suppliers or logistic service providers to address issues in the supply chain caused by the pandemic, such as decreased demand from the hospitality sector and reduced collections from retailers.
The United Kingdom exited the European Union on 31 January 2020. Thereafter there was a transition period until 11pm on 31 December 2020. Pursuant to the UK–EU Withdrawal Agreement 2019, the United Kingdom continued to apply and be subject to EU competition law throughout the transition period.
On 24 December 2020, the European Union and the United Kingdom reached a Trade and Cooperation Agreement (TCA), which defines the trading relationship between them following the end of the transition period, including the arrangements in relation to competition law. It also provides that the United Kingdom, the Commission, and the competition authorities of the EU member states will endeavour to cooperate and coordinate their enforcement activities where possible and appropriate.
Since 1 January 2021, the CMA and the concurrent regulators are no longer able to investigate and enforce articles 101 and 102 of the TFEU. That being said, articles 101 and 102 will continue to apply to conduct by UK firms that is implemented or produces effects within the European Union, which may also include UK conduct to the extent that it produces effects within the European Union, as has traditionally been the case with regard to third states (ie, non-EU member states). Furthermore, the Commission will continue to have competence over the UK elements of ‘continued competence cases’ (ie, cases that were initiated but not concluded by the Commission before the end of the transition period).
Prior to the end of the transition period, section 60 of the CA98 provided that UK competition authorities and courts must, as far as possible, interpret UK competition law in a manner that is consistent with EU competition law, including the case law of the European courts, and must have regard to any decision or statement of the Commission. Section 60 of the CA98 has now been revoked and replaced with a new section 60A. Section 60A applies to all cases from 31 December 2020 onwards, including ongoing CMA investigations and court cases that were ‘live’ on 31 December 2020 relating to conduct before 1 January 2021.
The CMA, concurrent regulators and the English courts are no longer required to interpret UK competition law consistently with the case law of the European Court, which is no longer binding. New EU case law (reached after 31 December 2020) is not binding on the UK antitrust agencies or the English courts. However, section 60A of the CA98 provides that the UK antitrust agencies and the English courts are required to ensure consistency with EU competition case law and the Commission’s decisions reached prior to 1 January 2021, unless it is considered to be ‘appropriate’ not to do so in light of certain specified circumstances.
It is expected that the CMA will be very active in antitrust enforcement following the United Kingdom’s break from the European Union, since it is now able to run an investigation under UK competition law in parallel with an investigation by the Commission and to focus specifically on the UK market.
 Annual Plan 2021 to 2022, published 23 March 2020.
 ‘Competition investigation regarding parcel delivery and pick-up services’, investigation opened on 22 November 2019.
 'Competition Act investigation regarding the provision of equipment and related services in the electronic communication sector', investigation opened on 7 June 2019.
 COMP/ 34579, Mastercard I, Commission decision of 19 December 2007.
 Case T-111/08, Mastercard and Others v Commission, judgment of 24 May 2012.
 Case C-382/12, Mastercard and Others v Commission, judgment of 11 September 2014.
 Sainsbury’s Supermarkets Ltd v Mastercard Inc and Others  CAT 11, judgment of 14 July 2016.
 Asda Stores Ltd and Others v Mastercard Inc and Others  EWHC 93 (Comm), judgment of 30 January 2017.
 Sainsbury’s Supermarkets Limited v Visa Europe Services LLC and others  EWHC 3047, judgment of 30 November 2017.
 Sainsbury’s Supermarkets Limited v Mastercard Incorporated and Others  EWCA 1536 (Civ), judgment of 4 July 2018.
 Sainsbury’s Supermarkets Ltd (Respondent) v Visa Europe Services LLC and Others (Appellants) and Sainsbury’s Supermarkets Ltd and Others (Respondents) v Mastercard Incorporated and Others (Appellants)  UKSC 24, judgment of 17 June 2020.
 DSG Retail Limited and Another v Mastercard Incorporated and Others  CAT 5, judgment of 14 February 2019.
 DSG Retail Limited and Another v Mastercard Incorporated and Others  CAT 10, ruling of 9 April 2019.
 DSG Retail Limited and Another v Mastercard Incorporated and Others  EWCA Civ 671.
 Section 47B of the Competition Act 1998 allows representative litigants to apply to the Competition Appeal Tribunal (CAT) to bring proceedings for damages on an opt-out basis on behalf of a class of claimants.
 Walter Hugh Merricks CBE v Mastercard Inc and Others  CAT 16, judgment of 21 July 2017.
 Walter Hugh Merricks CBE v Mastercard Incorporated and Others  EWCA Civ 674, judgment of 16 April 2019.
 Mastercard Incorporated and others (Appellants) v Walter Hugh Merricks CBE (Respondent)  UKSC 51, judgment of 11 December 2020.
 Allianz Global Investors GmbH and ors v Barclays Bank plc and ors  EWHC 399 (Comm).
 Generics (UK) Ltd and others v Competition and Markets Authority, Case C-307/18, judgment of 30 January 2020.
 Paroxetine, Case CE/9531/11, CMA decision of 12 February 2016.
 GlaxoSmithKline PLC v Competition and Markets Authority  CAT 4, judgment of 8 March 2018.
 Sun Pharmaceutical Industries and Ranbaxy (UK) v Commission (Cases C-586/16 P), P Generics (UK) v Commission (C-591/16), P Lundbeck v Commission (C-588/16), Arrow Group and Arrow Generics v Commission (C-601/16 P), P Xellia Pharmaceuticals and Alpharma v Commission (C-611/16) and P Merck v Commission (C-614/16), judgment of 25 March 2021.
 GlaxoSmithKline PLC v Competition and Markets Authority  CAT 9, judgment of 10 May 2021.
 ‘Synthesisers and hi-tech equipment: suspected anti-competitive agreements’, Case 50565-4, investigation opened on 17 April 2018. ‘Electronic drum sector: suspected anti-competitive agreements’, Case 50565-5, investigation opened on 17 April 2018.
 Online resale price maintenance in the synthesizer and hi-tech sector, Case 50565-4, CMA decision of 9 July 2020.
 Online resale price maintenance in the electronic drum sector, Case 50565-5, CMA decision of 22 July 2020.
 Roland v Competition and Markets Authority  CAT 8, judgment of 19 April 2021.
 Resale price maintenance in the digital piano and digital keyboard, and guitar sectors, Case 50565-6, CMA decision of 17 July 2020.
 ‘The consequences of restricting resale prices: an open letter to suppliers and retailers in the musical instruments sector’ of 29 June 2020.
 CMA press release, ‘5 office fit-out firms to pay £7 million fine for breaking competition law’ (1 March 2019).
 Roofing materials, Case 50477, investigation opened on 11 July 2017.
 Roofing materials, Case 50477, CMA decision of 4 November 2020.
 ‘Supply of groundworks products to the construction industry’, investigation opened on 28 February 2017.
 Supply of products to the construction industry (pre-cast concrete drainage products), Case 50415, CMA decision of 17 December 2020.
 Supply of products to the construction industry (pre-cast concrete drainage products), Case 50299, CMA decision of 23 October 2019.
 FP McCann Limited v Competition and Markets Authority, Case 1337/1/12/19, registered 20 December 2019.
 FP McCann Limited v Competition and Markets Authority  CAT 28, judgment of 22 December 2020.
 CMA press release, ‘Directors disqualified over illegal construction cartel’ (18 March 2021).
 See footnote 1.
 ‘Pharmaceuticals: suspected anti-competitive agreements’, Case 50511-2, investigation opened on 10 October 2017.
 ‘Pharmaceutical drugs: suspected anti-competitive agreements’, Case 50511-1, investigation opened on 10 October 2017.
 ‘Fludrocortisone acetate tablets: suspected anti-competitive agreement’, Case 50455, investigation opened on 10 October 2017.
 Anti-competitive agreement with respect to fludrocortisone acetate 0.1 mg tablets, Case 50455, CMA decision of 9 July 2020.
 CMS press release, ‘Pharma company director disqualified for competition law breaches’ (4 June 2020).
 ‘Hydrocortisone tablets: alleged excessive and unfair pricing, anti-competitive agreements and abusive conduct’, Case 50277.
 ‘Nortriptyline investigation: anti-competitive agreement and conduct’, Case 50507.2, investigation opened on 10 October 2017.
 Amit Patel v Competition and Markets Authority, Case 1348/2/12/20.
 Lexon (UK) Limited v Competition and Markets Authority, Case 1344/1/12/20.
 Lexon (UK) Limited v Competition and Markets Authority  CAT 5, judgment of 25 February 2021.
 ‘Privately funded ophthalmology services: price fixing’, Case 50782.
 Privately funded ophthalmology services, Case 50782-1, CMA decision of 1 July 2020.
 ‘Price comparison website: use of most favoured nation clauses’, Case 50505, investigation opened on 26 September 2017.
 Price comparison website: use of most favoured national clauses, Case 50505, CMA decision of 19 November 2020.
 CMA, ‘Residential estate agency services in the Burnham-on-Sea area: Director Disqualification’.
 ‘Replica football kits: suspected anti-competitive behaviour’, Case 50930, investigation opened on 15 December 2020.
 ‘Domestic lighting: suspected anti-competitive practices concerning resale price maintenance’, investigation opened 25 November 2020.
 ‘Investigation of the Atlantic Joint Business Agreement’, investigation opened on 11 October 2018.
 ‘Supply of construction services’, investigation opened on 19 March 2019.
 ‘Financial services sector: suspected anticompetitive arrangements’, investigation opened on 13 November 2018.
 Criminal cartels are the most serious and damaging forms of anticompetitive agreements, known as ‘hard core cartels’. They include agreements relating to price-fixing, the sharing of markets or customers, limiting production or supply, or bid rigging.
 CMA, ‘Roofing materials: director disqualification’.
 CMA press release, ‘Directors disqualified over illegal construction cartel’ (18 March 2021).
 CMA, ‘Nortriptyline investigation: director disqualification’.
 ‘Online platforms and digital advertising: Market study final report’, dated 1 July 2020.
 ‘Response to the CMA's market study into online platforms and digital advertising’, dated November 2020.
 The CMA has opened a number of investigations in the sector with regard to alleged abuse of dominance under Chapter II.
 Competition Act 1998 (Dairy Produce) (Coronavirus) (Public Policy Exclusion ) Order 2020 came into force on 1 May 2020.
 See Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, as endorsed by leaders at a special meeting of the European Council on 13 December 2019.
 See European Union (Withdrawal) Act 2018, c16, of 27 June 2018.
 See Competition (Amendment etc) (EU Exit) Regulations 2019, No. 93, of 22 January 2019.
 See Competition (Amendment etc) (EU Exit) Regulations 2020, No. 1343, of 19 November 2020.