Businesses can expect UK competition authority to be 'more proactive on enforcement', says expert

Tim Riisager of Pinsent Masons, the law firm behind Out-Law.com, said the Competition and Markets Authority (CMA) is likely to embrace a range of enforcement tools outside of full-scale competition investigations to address concerns raised about the low volume of competition cases it is handling and slow speed at which resolutions are being found.

Riisager said companies should review their compliance programmes and staff training regimes to ensure they do not fall foul of a more pro-active CMA.

Riisager was commenting after CMA general counsel Sarah Cardell said the regulator is "taking clear steps to deliver on [its] commitment to increase the volume of enforcement, doing so as efficiently and quickly as possible, but maintaining a firm grasp on the need for fairness and rigour".

A recent report by the National Audit Office (NAO) contained criticism of the number of enforcement decisions issued by competition authorities in the UK compared with their counterparts in Germany and France. The NAO said that the UK government should step in to help improve the "flow of enforcement decisions" in the UK if action the CMA is itself taking does not result in a "significant" increase in the number of enforcement decisions issued. 

In her speech at the IBC UK Competition Law Conference 2016 in London, Cardell said that there is recognition within the CMA of the need to increase the "pace" of enforcement whilst not "compromising quality". She said that, as general counsel, she feels "a particular responsibility" for ensuring the CMA delivers "the optimum mix of speed, impact and rigour".

Cardell addressed the range of options available to the CMA to enforce competition rules. These include formal investigations, which may lead to infringement decisions and penalties being imposed but may also lead to the parties under investigation settling the case early by admitting an infringement in exchange for a reduced fine.  She also referred to cases where companies make legally binding commitments to the CMA to end behaviour which is the subject of an investigation. Commitment decisions do not lead to penalties being imposed so are not appropriate for the most serious categories of infringement.

Cardell announced that the CMA would set out new timeframes that it and companies would have to adhere to "ensure an efficient commitments process". She said that the CMA would not accept commitments from companies in every case.

"We understand that it is important for us to be clear to parties who offer commitments whether the investigation has progressed sufficiently for us to be able to determine whether commitments are appropriate," Cardell said. "We will also indicate, if commitments are clearly not appropriate for that case, whether and when alternatives such as settlement might be available. This can form part of the regular updates that parties receive during an investigation, in particular where we are able to share our provisional thinking on the case."

"Where commitments are appropriate we will set out expected timeframes that will apply to both the CMA and the parties to ensure an efficient commitments process. We expect parties to respect these and understand that the success of the process depends on their constructive engagement by offering effective commitments which allow us to adhere to those timeframes. Otherwise we will have to revert to the normal investigative process," she said.

Riisager said that the CMA faces a challenge in making the most of its finite resources, especially where it has to deal with a steady workload of merger cases. He said that an emphasis on procedural robustness at the CMA following high profile successful appeals of decisions of its legacy organisation, the Office of Fair Trading, may have also led to a more conservative approach to enforcement to date.

However, Riisager said that whilst the CMA is right to maintain flexibility over what enforcement tools to use on a case-by-case basis, there were potential drawbacks to resolving cases through commitments or by using warning letters to encourage changes in business practices. Cardell suggested the CMA might make more use of warning letters in future.

"There is an argument that warning letters will not have the same wider deterrent effect as the use of formal enforcement tools, and it remains unclear whether the CMA would be willing to commence a full investigation if companies challenged calls in those letters for them to change their practices," Riisager said.

Cardell said that the CMA would look to settle cases where it sees an opportunity to speed up the resolution of cases. However, she said the CMA would look to ensure it has met the "evidential standard" necessary to issue a statement of objections to companies for allegedly breaching competition laws before agreeing a settlement.

"Not all cases will be appropriate for settlement: when assessing whether a given case would be, we will consider the likely procedural efficiencies and resource savings that can be achieved, considering for example the stage of the case, the number of businesses interested in settlement and the potential for shortening the case timetable," Cardell said.

"Achieving greater pace is also beneficial for the businesses involved in our work – it provides businesses with the certainty of the outcome more quickly, allowing them to move on. Therefore we want to continue to engage constructively with parties who make use of processes we have available to do so, such as settlement, where this is appropriate to the case at hand," she said.

"Concluding cases more swiftly ensures that harmful anti-competitive practices are combatted and deterred sooner, benefiting consumers and, by stimulating innovation and growth, the wider economy. It also enables us to deploy resources elsewhere, for example in other enforcement work, and so increase the volume and as a consequence the impact of our work," she said.

Riisager said: "On the whole, settlements are to be welcomed from a business perspective as they avoid a drawn out process which can require significant resource and financial uncertainty, From the CMA’s perspective, it also allows for a greater throughput of cases increasing the organisation's enforcement profile, potentially creating deterrence value and enabling the law to develop."