The Enterprise and Regulatory Reform Act 2013 took effect on 1 April 2014. Increased efficiencies and deterrence are the main drivers of this reform.
As of 1 April 2014, the Enterprise and Regulatory Reform Act 2013 (ERRA) brings about significant substantive and structural change to the United Kingdom’s competition regime. As part of a more general overhaul of this regime, the recently created Competition and Markets Authority (CMA) becomes fully operational, a revised criminal cartel offence enters into force, and the merger control regime becomes more robust. These changes bring in their wake a swathe of new investigatory and enforcement powers and penalties for failure to comply. Businesses are therefore urged to take note of these new changes and to be alert to compliance risk. This On the Subject summarizes some of the key aspects of the reforms.
On 29 January 2013, the UK Government’s Department for Business, Innovation & Skills announced new proposals designed to improve the ability for consumers and businesses to bring collective damages claims against competition law infringers.
The new proposals contain novelties that should make it easier for consumers and businesses to claim damages for loss arising out of competition infringements. While this may increase the financial exposure of the infringers, it could also introduce a greater degree of clarity as to the procedural rights of both sides, and provide infringers with the possibility to settle matters quickly and with limited publicity.
The UK Government’s new proposals, which were preceded by extensive public consultation, would
Extend the jurisdiction of the Competition Appeal Tribunal (the CAT) so as to include “stand-alone” claims and the ability to grant injunctions
Introduce an “opt-out” form of collective action for competition damages claims, subject to a number of safeguards
Promote the use of Alternative Dispute Resolution (ADR) in competition damages actions
Ensure that any developments in the area of private damages actions complements the public enforcement regime.
An Increased Role for The Specialist CAT
The new proposals seek to make the CAT—which is a specialist tribunal—the jurisdiction of choice for all private damages actions in the United Kingdom.
First, the CAT would be given jurisdiction to try stand-alone claims in addition to its current jurisdiction to try “follow-on” claims. Follow-on claims are those made after the European Commission or the UK Competition Authority has determined that an infringement exists, and so the only issues before the CAT are those of causation and the amount of damages to be awarded. In stand-alone claims, on the other hand, the CAT itself will have to determine whether an infringement exists. At present, stand-alone claims can only be brought before the High Court in England and Wales (or the Court of Session in Scotland).
Second, the limitation period for bringing stand-alone and follow-on claims before the CAT would be aligned with that for the High Court in England and Wales, namely six years, and that for the Court of Session in Scotland, namely five years.
Third, the CAT would be empowered to grant injunctions in proceedings in England and Wales and Northern Ireland, but not interdicts in Scottish cases.
Fourth, a fast track procedure would be instituted for simple cases before the CAT, with a cap on costs set on a case-by-case basis by the CAT at its discretion.
Finally, where appropriate, it would be possible to transfer cases from the High Court or the County Court in England and Wales to the CAT and from the CAT to the High Court. In Scottish cases such transfers would be possible between the corresponding Scottish courts and the CAT.
The Introduction of an Opt-Out Collective Actions Regime
The new proposals would create a new form of collective action—an opt-out competition damages action—designed to avoid the [...]
UK antitrust regulator issues revised antitrust guidance. The OFT introduces increased transparency, more active participation and greater checks and balances into antitrust proceedings.
On November 23, 2011, the European Commission published a new brochure, “Compliance Matters – What Companies Can Do Better to Respect EU Competition Rules.” Its stated purpose is to help companies that do business in the European Union "stay out of trouble" and to ensure their compliance with EU competition rules. However, it does not cover the various practical and legal problems that companies face when developing and implementing compliance programs.
The first part the brochure focuses on the general obligation to comply, as well as the benefits of compliance, such as the enhancement of a company’s reputation and attractiveness for promotional and recruitment purposes. The second part describes the costs of non-compliance: fines for companies, sanctions on individuals, nullity of illegal agreements and the possibility for damage claims before national courts, and bad press and collateral consequences. The third part gives an overview on the applicability of EU competition rules. The fourth part sets out the strategy that companies should follow to ensure compliance, including the basic steps for identifying the overall risk and individual exposure, as well as steps for implementing the compliance strategy, staff-training, keeping the compliance program current, and monitoring and auditing.
The European Commission makes clear that "although all compliance efforts are welcomed, the mere existence of a compliance programme is not enough to counter the finding of an infringement of competition rules." With respect to setting the level of fines, the Commission reinforces its position that while a company’s specific situation is taken into account "the mere existence of a compliance programme will not be considered as an attenuating circumstance,” nor will it be a valid argument to justify a reduction of the fine. Thus, the position of the European Commission stands in contrast with recent statements by the UK Office of Fair Trading (OFT) and France’s Autorité de la Concurrence, both of which stated their intention to take the existence of a compliance program into account when setting the amount of fines.
In Europe, the interplay between antitrust and criminal law at the national level may vary significantly by jurisdiction. Some European Union member states, such as the United Kingdom, Ireland, and Romania, have criminalized competition law. Other jurisdictions, such as Germany and Italy, do not envisage criminal penalties for anticompetitive practices; however, such conduct may sometimes qualify as a separate criminal offense. The following cases, across Europe, show that there appears to be a general trend towards more effective enforcement against serious antitrust violations – including by means of criminal penalties against individuals – and not only in the countries with criminal competition laws.
The German Federal Cartel Office (FCO) announced yesterday that it has launched a sector inquiry into food retailers. The FCO will focus its study on foodstuffs and luxury foodstuffs without explicitly naming particular goods in its press release but broadly stating that the enquiry will only focus on “selected product groups”. According to the official statement from the FCO, which is only available in German, the authority seeks to improve its “understanding” of the relationship between retailers and suppliers. The FCO plans to have a close look into the market power of the large retailers. The assessment will also focus on “whether and to what degree the leading retailers enjoy a purchasing advantage over their competitors”.
The retailer market in Germany is very concentrated, with only four large retailers holding about 85 percent of the market. The FCO thus plans not only to shed light into the buyer power of the large retailers but will also focus on whether the “consolidation process” in the retail market has also led to a concentration in the procurement markets to the benefit of the largest retailers.
The sector enquiry should, according to the official statement from the FCO, support its analysis of the food purchasing market which is currently being investigated following dawn raids at the premises of more than 15 companies on the retail and the manufacturing level of branded products, mainly foodstuffs, on suspicion of co-ordinated retail price-fixing, in January 2010.
If the FCO will start an investigation into individual companies in the food retail market and how the sector enquiry will affect the investigation into branded goods, started in January 2010, remains unclear. The case draws parallels to the UK where the Office of Fair Trading launched several market investigations and market studies into the UK food retailer and manufacturer markets.
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