What kinds of infringement has the antitrust authority been focusing on recently? Have any industry sectors been under particular scrutiny?
There are two types of potential infringement that the UK Competition and Markets Authority (CMA) has been focusing on recently and that stand out as being somewhat ‘novel’: potential cartel conduct (1) restricting competition in labour markets (eg, no poach agreements or similar) and (2) relating to environmental considerations (eg, where environmental credentials could be parameters of competition). The CMA’s investigations scrutinising this conduct remain ongoing. We expect that the CMA will establish that such conduct can constitute infringements of UK competition law, in line with practice in other jurisdictions.
In terms of sector focus, life sciences have been under particular scrutiny in the past few years. We know from our UK competition law enforcement report (September 2024), which analysed every single CMA enforcement decision since the inception of UK competition law, that, between 2016 and 2018, the CMA initiated eight pharmaceutical investigations under Chapter I of the Competition Act 1998 (ie, the prohibition on anticompetitive agreements). More recently, the CMA’s focus has shifted to the tech sector, given the CMA’s newfound jurisdiction to investigate Big Tech following Brexit, as well as the rising impact of technology in consumers’ everyday lives. Two sectors otherwise stand out as being consistently scrutinised by the CMA over the lifespan of the Competition Act 1998: the building/construction, and consumer and retail sectors. Analysis from our enforcement report indicates that overall, approximately 34 per cent of Chapter I infringement investigations have been in consumer and retail, 16 per cent in building and construction and 12 per cent in life sciences.
What do recent investigations in your jurisdiction teach us?
Recent investigations illustrate that the CMA is keen to establish itself as a leading competition authority on the global stage in the wake of Brexit. This manifests itself in several respects. First, it has initiated several investigations in parallel with world-leading competition authorities, scrutinising conduct with potential global or pan-European effect, and coordinating its investigations with these other authorities. Examples include the automotive and fragrance sectors, where the CMA is investigating alongside the European Commission (automotive), and alongside the European Commission, US Department of Justice, and the Swiss Competition Commission (fragrances). Second, the CMA has shown an appetite to explore cutting-edge potential issues (see, for instance, conduct referred to in question 1) and ensure it is in the mix where other authorities are giving thought to new areas.
Recent investigations also demonstrate the increasingly global nature of competition law risk for companies, and the need to develop a coordinated approach to compliance across jurisdictions. This risk is magnified when considering the backdrop of a burgeoning competition class action regime in the UK, which is home to a very large number of follow-on (or hybrid) claims for damages based on pre-existing competition decisions. Few CMA decisions have yet formed the grounds for such actions but we expect this to change shortly as more post-Brexit CMA investigations conclude.
Have there been any recent developments in terms of dawn raids? Has the competition authority raided individual homes as part of any probes and have any of these searches been challenged successfully or otherwise?
For a period during and post pandemic, the CMA seemed to adapt its approach by sending, often with prior notice, smaller teams focused on IT and managed remotely by the remainder of the dawn raid team based at the CMA. Recently, the practice of sending larger teams to multiple locations seems to have resumed, although we have found the CMA relies increasingly on investigated companies to forensically identify and produce documents relevant to the investigation.
In terms of other developments, the CMA acquired broader powers of investigation on 1 January 2025. These now explicitly include the power, with a warrant, to require the production of information not on premises but accessible from them (eg, data on cloud or remote infrastructure), including by operating on-premises equipment. The CMA can impose significantly higher penalties for obstruction or other procedural breaches (eg, deleting documents): up to 1 per cent of annual turnover (up from a cap of £30,000 previously), and up to 5 per cent of the undertaking’s daily turnover for daily penalties (up from a cap of £15,000 previously). It can also now fine individuals, such as director and employees, separately from undertakings, up to £30,000 (or up to £15,000 for daily penalties). In addition, it now has the power to ‘seize and sift’ in individual homes, meaning it can remove material from homes to examine later at CMA premises, in the same way as it can for business premises.
We know that the CMA has raided individual homes in several investigations – according to a court judgment from April 2024, the CMA has obtained warrants to raid homes in nine cases since 2017. It continues to regard homes as an important potential source of relevant material, particularly with the increase in home working following the pandemic, as demonstrated by its successful lobbying for the broader powers described above.
There have been two notable challenges to the CMA’s search and investigation powers. First, the CMA successfully challenged a refusal by the Competition Appeal Tribunal (CAT) to grant a warrant for a search of domestic premises. The CAT had refused the CMA’s application for the warrant on the basis that the CMA had not satisfied the legal requirements, which it considered to be stricter for domestic premises (notwithstanding that the wording in the legislation is the same as for business premises). Specifically, the CAT considered that the CMA had not demonstrated the risk of evidence being destroyed or tampered with, justifying the need for the warrant. This risk is usually inferred from the suspected existence of a secret cartel, where the courts recognise there is a strong motive to conceal evidence. The CAT considered that the CMA could not draw this inference in respect of domestic premises without showing ‘something more’ to suggest a propensity, by the individual in respect of whose home the warrant is being sought, to destroy evidence. This position was reversed by the High Court (HC) in 2024. The HC disagreed with the CAT that as a rule ‘something more’ is required for domestic premises. The HC’s succinct ruling leaves open a number of questions, but does suggest that the CMA will not always be able to draw the same inference for domestic premises as for business premises. The HC judgment highlights that this will need to be a case-by-case assessment, including consideration of the individual’s position in the undertaking and the extent of his or her involvement in the suspected cartel. Second, a joint ruling by the CAT and HC found that the CMA did not have the power to compel the production of documents and information from overseas companies. This position was reversed by the Court of Appeal in 2024, and an appeal to the Supreme Court is currently pending. In the interim, this power has been explicitly granted to the CMA with legislative changes introduced on 1 January 2025.
How is the leniency system developing, and which factors should clients consider before applying for leniency?
Based on our analysis of the CMA’s statistics (and as the CMA has itself acknowledged), the CMA has not seen a material drop in leniency applications, despite a healthy and growing class action regime in the UK. Our competition law enforcement analysis (based on published decisions) indicates that roughly 40 per cent of all leniency applications received since the inception of competition law 25 years ago were made in the past 10 years.
The first successful leniency applicant will obtain total immunity from a financial penalty where there is no pre-existing investigation. Where there is a pre-existing investigation, the first applicant may still receive up to 100 per cent immunity but this is discretionary. Subsequent leniency applicants may be eligible for material discounts (of up to 50 per cent) if they add significant value to the CMA’s investigation. The risk of litigation does, however, mean that companies need to weigh up the potential benefits of leniency carefully. The assessment is a multi-factorial one but looming large are the level of evidence and certainty that the client has engaged in cartel conduct; the risk of follow-on litigation (where damages may significantly exceed the size of any CMA penalty); and the risk that there will be an investigation and that it may lead to infringement in any event. Clients also need to consider: (1) the commitment and cooperation that come with leniency, and potentially expose the company to scrutiny in other ways; and (2) the practical loss of appeal rights and risk that an admission in a leniency application may impact the company’s ability to run a defence in any claim or investigation in another jurisdiction.
The decision to go for leniency is generally a finely balanced one, but one client may need to reach relatively quickly (but not in haste) given the potential race for immunity. Sufficient evidence will need to be gathered both to make that assessment and to support the application if made.
What means exist in your jurisdiction to speed up or streamline the authority’s decision-making (eg, settlement procedure), and what are your experiences in this regard?
A formal settlement procedure was introduced in 2014 (it existed informally before then). It is now a tried and tested process that does result in (sometimes significantly) shorter investigation periods and efficiencies beneficial to both companies and the CMA. We found from our competition law enforcement report that, since 2014, the average duration of a settled investigation was approximately 20 months, against an average duration of 40 months for fully contested investigations.
Settlement broadly requires the company to admit to the infringement and accept a streamlined administrative procedure, in exchange for a settlement discount. For cartels, this discount is up to 20 per cent pre-Statement of Objections (SO) and up to 10 per cent post-SO (the discounts are materially higher for non-cartel conduct). In recent years, the CMA has introduced an additional requirement for parties to waive their right to appeal the settled decision, either on substance or regarding the penalty.
Our experience of the settlement procedure has varied. Most often we have found it to be a relatively rigid process, with little scope to engage on issues with the CMA. This will, however, depend on the case and context.
For completeness, we know from our competition law enforcement report that cases that concluded with a decision to accept commitments were on average shorter (around 20 months) than decisions finding an infringement (whether contested or settled, about 30 months on average). However, cartels are unlikely to be suitable candidates for commitments.
Tell us about the authority’s most important decisions over the year. What made them so significant?
We would highlight two judgments in the pharma sector over the past year, both appeals from CMA decisions, one overturned and one upheld, which in our view are more significant than CMA decisions in the past year. Both raise interesting issues about the concept of, and evidence needed to show, agreement under the Chapter I prohibition, particularly where alleged agreements are unwritten.
In Prochlorperazine, the CMA found an overarching unwritten ‘market exclusion’ agreement had been entered into by the marketing authorisation holder, Alliance Pharmaceuticals, and another competitor, with two parties later joining the agreement. Its infringement finding was overturned in the CAT in May 2024. The CAT found that the CMA had failed to demonstrate, on the balance of probabilities, the existence of the alleged agreement. The CAT criticised the way the CMA assessed the factual evidence, including its selective and out of context quotation of certain passages of a document and its reliance on speculative explanations to rebut the wording of emails. And significantly, the CAT criticised the CMA for not calling witnesses from the parties, including Alliance, who authored documents on which the CMA sought to rely, particularly where these were ambivalent. The case will have ramifications for the way in which the CMA prioritises its enforcement activity and discharges its burden of proof.
In Hydrocortisone by contrast, the CMA ultimately prevailed in the Court of Appeal following a sequence of judgments from the CAT, in a case notable for both substance and procedure. On substance, the Court of Appeal upheld the CMA’s finding that the parties had entered into a ‘pay for delay’ agreement, based on an unwritten common understanding inferred from the factual context to the negotiations and the absence of alternative explanation for the value transfers. The CMA’s case, as upheld, essentially turned on the fact that the parties had concluded a (prima facie legitimate) supply agreement, but on significantly advantageous terms for the party in receipt of the supply (a 97 per cent discount on prevailing market price), on the premise that it would not enter the market with its own product. The case raises interesting questions about parties’ awareness of each other’s motives for entering into an agreement and the importance of the negotiation context in demonstrating that they had ‘crossed the line’ into a tacit agreement. Procedurally, the Court of Appeal overturned (and criticised) the CAT’s highly unusual approach. The CAT had issued ‘provisional’ findings of fact in two separate judgments, before finding in a third judgment on process that the CMA’s failure of due process fatally undermined the conclusion that there was sufficient material to uphold the CMA’s decision. The Court of Appeal ruled unequivocally that the CAT’s procedure was inappropriate and that it should have determined the appeal on their merits on the evidence it had heard.
Is the competition authority working with other agencies, be it nationally or internationally, in any cartel probes?
The CMA works with other authorities both nationally and internationally.
Nationally, the UK has a network of concurrent competition authorities, with powers to apply UK competition law in their specific sectors of expertise. The CMA has residual competence to apply UK competition law across the entire economy, and where their powers overlap, the CMA and these authorities coordinate to determine who is best placed to take a case forward. For example, the CMA and Ofcom agreed that Ofcom should take forward the investigation into Motorola and Sepura (where Ofcom found they had exchanged commercially sensitive information in breach of Chapter I).
Internationally, the CMA is running parallel investigations and liaising with a number of authorities, including the European Commission, the US Department of Justice and the Swiss Competition Commission.
What is the level of judicial review in your jurisdiction? Were there any notable challenges to the authority’s decisions in the courts over the past year?
CMA cartel decisions are subject to a full appeal on the merits in the CAT. While the CAT takes as its starting point the CMA’s decision, it is a judicial procedure with cross-examination of factual and expert witnesses, and the CAT has shown an appetite to properly scrutinise the substance of the CMA’s decisions. For instance, in Hydrocortisone, the CAT’s judgments show the extent to which it was prepared to intervene to ensure the CMA had met its obligation to put its central case to a key witness, and to reverse a substantive finding of infringement on account of a procedural error (notwithstanding that its approach was ultimately overturned by the Court of Appeal).
Our competition law enforcement analysis indicates that over one-third of appeals (of all infringement decisions, not just those related to cartels) to the CAT have been successful. This rises to 70 per cent when considering partial appeals (on penalty, albeit that a number of these appeals were decided under previous iterations of the guidance, which has been amended to take into account such appeal decisions).
How is private cartel enforcement developing in your jurisdiction?
Private enforcement is alive and well in the UK. There have been several cases seeking to establish de novo the existence of a cartel, even though their success rate has varied. The most recent of these is a case brought by the administrators of Phone4U, a former retailer of mobile phones, alleging that senior executives at three major UK mobile network operators (Vodafone, EE and O2/Telefonica) coordinated their supply arrangements in a manner that caused the distributor to shut down. The High Court dismissed the claim but the administrators have appealed.
The competition class action regime is the most striking illustration of private enforcement in the UK. Our analysis of European class actions shows that England & Wales is still the leading European jurisdiction by number of claims. Since the regime’s introduction in 2015, there has been an exponential rise in both the number and value of claims filed (although this growth has lately slowed). A large majority of these claims (whether opt-in or opt-out) are standalone (ie, not following on from a pre-existing decision by a competition authority). However, they are often inspired from and/or grounded in a pre-existing decision. For instance, Stellantis brought a claim against Autoliv, a manufacturer of car safety equipment, relying on the European Commission’s two Occupant Safety Systems Decisions, even though the Commission had not found Stellantis to be among the original equipment manufacturers (OEMs) targeted by the cartel conduct. Stellantis pursued a standalone claim alleging a market-wide cartel or distinct cartels targeting its companies, as well as a ‘spillover’ or ‘umbrella’ claim alleging harm from the market distortion arising from the cartels.
To date, the climate has been favourable to the filing of such claims. The bar for certification of a class action has been set relatively low by UK courts; and litigation funders have shown an appetite to support claims based on novel theories of harm. However, there are recent indications that this context may be evolving. For instance, the litigation funder of the first UK competition class action to receive certification, Walter Merricks’ claim against Mastercard, has publicly vowed to object to the settlement, now approved by the CAT, for being too low and premature. The CAT unanimously dismissed Stellantis’ claim described above, finding on the balance of probabilities that the case was not proven and cartel conduct could not simply be inferred from a wider established cartel where alternative plausible explanations were possible – although it rejected the notion that ‘strong and compelling’ evidence was required to discharge the burden of proof. And the CAT has recently refused certification in two cases – in one of those, on the basis that the class representative had failed to demonstrate sufficient independence from legal counsel and a good understanding of the funding arrangements.
What changes do you anticipate to cartel enforcement policy or antitrust rules in the coming year? What effect will this have on clients?
The CMA has acquired enhanced powers to investigate as of 1 January 2025. These changes also include a new ‘duty of expedition’, requiring the CMA (and concurrent regulators) to make decisions or take action as soon as is reasonably practicable.
There has been a notable change in the policy landscape recently, and it is unclear what effect this might have on cartel enforcement going forward. The UK government has publicly called for UK regulators to support its growth mission and has appeared to take issue with the CMA in particular. It dismissed the chair of the CMA in January 2025, to the surprise of the antitrust community. The draft ‘Strategic Steer’ to the CMA published by the government in February continues to tow this line and implores the CMA to have economic growth at the heart of its decision-making in respect of all aspects of its activity over which it has discretion. The steer also directs the CMA to consider actions taken by other competition authorities internationally to avoid duplication where such actions might effectively address issues in the UK – which could be taken as a hint for the CMA to pause before launching parallel investigations and consider whether a cartel case prosecuted in another jurisdiction could effectively address issues for UK consumers. These developments are much more relevant to other areas of the CMA’s remit, especially mergers, and the CMA itself has published multiple reports on the economic benefits of vigorous competition enforcement. It would be surprising if the government’s steer resulted in softer competition enforcement – and, indeed, that would likely be detrimental to UK consumers. But it is too early to say what effect this will have. At the very least, the CMA will be politically alive to the cases it chooses to pursue.
The Inside TrackWhat was the most interesting case you worked on recently?
We represented Alliance in Prochlorperazine. We had to assess a complex evidentiary framework (much of it circumstantial), but there was an important personal dimension. Concurrently with its defence, the CMA was pursuing a number of directors for director disqualification, including two from Alliance, both former CEOs and key factual witnesses. The human sensitivity required in mounting a heavily fact-based appeal in those circumstances was a stand-out feature. Separately we would highlight the ongoing ‘end of life vehicles’ case, which involves the topical issue of application of Chapter I to recycling and environmental characteristics. We represent a major OEM.
If you could change one thing about the area of cartel enforcement in your jurisdiction, what would it be?
It would be around increasing the possibilities within the CMA as an institution for more regular dialogue with parties on theories of harm and evidence. This dialogue takes place well at key junctures in the case such as statement of objections, draft penalty statement and settlement meetings. It happens less effectively at other stages of the case, where enabling case teams to have more of a two-way dialogue may be mutually beneficial.