UK competition regulation

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UK competition regulation

Nov 16, 2020, 15:55 PM
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https://www.lexisnexis.com/uk/lexispsl/competition/document/391332/5BVD-BHW1-F187-71GG-00000-00
UK competition regulation
UK competition regulation#UK competition law#EU or UK law?#UK regulatory structure#Structure of the CMA#Decision making–merger investigations#Decision making–antitrust investigations#Decision making–market investigations#Concurrent enforcement of competition law in the UK#Private enforcement of competition law in the UK
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This Practice Note sets out the UK structure for enforcing competition law, including appeal processes. The different processes for investigating mergers, markets and restrictive practices are all summarised, as are the powers of the UK competition authorities and the structure of the CMA, the UK’s main regulator.

BREXIT: The law and practice referred to in this Practice Note may be impacted by Brexit. For further information on the potential impact, see: The effect of Brexit on UK competition law in a deal or no deal scenario.

UK competition law regulates anti-competitive conduct, merger control and ensures markets are competitive.

The Competition and Markets Authority (CMA) is the principal UK competition authority. The CMA was formed following the merger of the OFT and the Competition Commission. It assumed responsibility for enforcing competition law in the UK on 1 April 2014.

UK competition law

The competition law powers of the CMA and other UK competition authorities are:

  1. to enforce the prohibition on anti-competitive agreements and the prohibition on abusing a dominant position

  2. to bring criminal prosecutions against individuals responsible for implementing hardcore cartels (see The UK criminal cartel offence)

  3. to seek director disqualification orders against any directors involved in competition law breaches (see Director disqualification)

  4. to investigate mergers in the UK and block or seek remedies for those that result in a substantial lessening of competition, and

  5. launch investigations into any industries to ensure markets are competitive and seek remedies for those where there is an adverse effect on competition.

EU or UK law?

EU and UK law consists of legislation, court judgments and the decisions of regulators.

When investigating anti-competitive practices (ie anti-competitive agreements and the abuse of dominant positions), UK competition regulators apply both EU and UK competition law. For example:

  1. when investigating anti-competitive agreements and agreements, Article 101 TFEU will apply to conduct that may impact cross-border trade between EU Member States and Chapter I of the Competition Act 1998 will apply to conduct that will only impact on trade within the UK

  2. when investigating alleged abuses of dominant positions, Article 102 TFEU will apply to conduct that may impact on cross-border trade between EU Member States and Chapter II of the Competition Act 1998 will apply to conduct that will only impact on trade within the UK.

For more information on when conduct will affect cross-border trade, see Effect on trade.

In practice there is no distinction between EU and UK law on anti-competitive practices as UK competition law must be interpreted consistently with EU competition law. This means that when reaching decisions in cases, UK courts and regulators must follow EU legislation and the decisions and judgments of the European Commission and the EU courts.

UK merger rules are different to EU merger rules—however, UK merger rules will only apply to transactions that are not caught by EU merger rules (see Relevant merger situation).

UK regulatory structure

The structure for investigating restrictive practices in the UK is summarised below.

For more detail on investigations, see UK investigations—steps in CMA investigations.

The structure for investigating mergers and markets in the UK is summarised below.

For more detail on UK merger investigations see UK merger investigation process and for more detail on UK market investigations see UK market investigations.

Investigations into allegations of anti-competitive behaviour in regulated industries (eg telecoms, energy, water, rail, aviation, healthcare and financial services sectors) can be carried out by the relevant sectoral regulator or the CMA (see Concurrent enforcement of competition law in the UK below).

Appeals against competition (and regulator) decisions can be brought before the Competition Appeal Tribunal (CAT) (a specialist tribunal). Subsequent appeals are available to the Court of Appeal and then the Supreme Court.

Structure of the CMA

The CMA is headed by CMA Board, made up of executive and non-executive directors (including the Chair and one other member of the CMA panel). The current Chief Executive is Andrea Coscelli and the current Chair is Andrew Tyrie.

There are specialist cartel, merger and market units, the Chief Economist's team (made up of competition economists) and the legal team.

Decision making–merger investigations

Phase 1

If, after a phase 1 investigation, the CMA does not have serious competition concerns about a merger, the decision to clear the transaction will be taken within the CMA's Mergers Unit, typically by the Director or Senior Director of Mergers. A decision that there isn't a relevant merger situation will also be taken by a director in the CMA's Mergers Unit.

If, after a phase 1 investigation, the CMA does have competition concerns about a merger, the decision whether the transaction meets the test for referral for a phase 2 investigation is taken at a decision meeting within the CMA. This decision meeting is chaired by the decision maker (typically, the CMA Chief Executive, the Senior Director of Mergers, a Director of Mergers or another CMA Senior Director) and is attended by all present at the case review meeting (CRM). The recommendation from the CRM is presented and the 'devil's advocate' (an independent member of CMA staff from outside the Mergers Unit who is tasked to comment critically on the case team's recommended outcome) in the case will present the opposing view if there is no consensus. After this meeting, the decision maker will decide whether or not the test for referral is met.

Phase 2

All phase 2 investigations are carried out by an inquiry group appointed specifically for the investigation and made up at least three (and typically no more than five) members of the CMA Panel—this mirrors the former Competition Commission procedure with the CMA Panel replacing the Competition Commission panel. The inquiry group acts as the decision maker in phase 2 investigations and also oversees the investigation, including setting the overall direction of the investigation, reviewing evidence and analysis, carrying out site visits and conducting hearings with the parties to the merger and third parties.

The inquiry group for each transaction is appointed by the Chair of the CMA, although this responsibility is generally delegated to the CMA Panel Chair (or one of the Deputy Panel Chairs). Before the inquiry group is appointed, the Chair of the CMA may act in their place (eg in relation to interim orders and initial information requests).

See further, The UK merger investigation process.

Decision making–antitrust investigations

CMA cartel or abuse of dominance investigations are carried out by a dedicated case team drawn from the CMA's Anti-Trust Group and/or the Cartels and Criminal Group (the two groups together making up the Competition Enforcement Directorate), supported by economists and lawyers. The case team is led by a team leader, who is responsible for the day-to-day running of the case. The team leader is, in turn, supervised by project director who directs the case.

A senior responsible officer (SRO, usually a CMA director or senior director) is responsible for interim decisions during an investigation (eg opening an investigation, issuing statement of objections, closing a case, accepting commitments, settling and imposing interim measures) after consulting two senior CMA colleagues, referred to by the CMA as '1 plus 2' decision making (this is not the case decision group). Note—the CMA's Case and Policy Committee will need to be consulted and approve any decisions in relation to commitments and settlement.

The following Competition practice note provides comprehensive and up to date legal information on UK competition regulation

BREXIT: The law and practice referred to in this Practice Note may be impacted by Brexit. For further information on the potential impact, see: The effect of Brexit on UK competition law in a deal or no deal scenario.

UK competition law regulates anti-competitive conduct, merger control and ensures markets are competitive.

The Competition and Markets Authority (CMA) is the principal UK competition authority. The CMA was formed following the merger of the OFT and the Competition Commission. It assumed responsibility for enforcing competition law in the UK on 1 April 2014.

UK competition law

The competition law powers of the CMA and other UK competition authorities are:

  1. to enforce the prohibition on anti-competitive agreements and the prohibition on abusing a dominant position

  2. to bring criminal prosecutions against individuals responsible for implementing hardcore cartels (see The UK criminal cartel offence)

  3. to seek director disqualification orders against any directors involved in competition law breaches (see Director disqualification)

  4. to investigate mergers in the UK and block or seek remedies for those that result in a substantial lessening of competition, and

  5. launch investigations into any industries to ensure markets are competitive and seek remedies for those where there is an adverse effect on competition.

EU or UK law?

EU and UK law consists of legislation, court judgments and the decisions of regulators.

When investigating anti-competitive practices (ie anti-competitive agreements and the abuse of

BREXIT: The law and practice referred to in this Practice Note may be impacted by Brexit. For further information on the potential impact, see: The effect of Brexit on UK competition law in a deal or no deal scenario.

UK competition law regulates anti-competitive conduct, merger control and ensures markets are competitive.

The Competition and Markets Authority (CMA) is the principal UK competition authority. The CMA was formed following the merger of the OFT and the Competition Commission. It assumed responsibility for enforcing competition law in the UK on 1 April 2014.

UK competition law

The competition law powers of the CMA and other UK competition authorities are:

  1. to enforce the prohibition on anti-competitive agreements and the prohibition on abusing a dominant position

  2. to bring criminal prosecutions against individuals responsible for implementing hardcore cartels (see The UK criminal cartel offence)

  3. to seek director disqualification orders against any directors involved in competition law breaches (see Director disqualification)

  4. to investigate mergers in the UK and block or seek remedies for those that result in a substantial lessening of competition, and

  5. launch investigations into any industries to ensure markets are competitive and seek remedies for those where there is an adverse effect on competition.

EU or UK law?

EU and UK law consists of legislation, court judgments and the decisions of regulators.

When investigating anti-competitive practices (ie anti-competitive agreements and the abuse of

dominant positions), UK competition regulators apply both EU and UK competition law. For example:

  1. when investigating anti-competitive agreements and agreements, Article 101 TFEU will apply to conduct that may impact cross-border trade between EU Member States and Chapter I of the Competition Act 1998 will apply to conduct that will only impact on trade within the UK

  2. when investigating alleged abuses of dominant positions, Article 102 TFEU will apply to conduct that may impact on cross-border trade between EU Member States and Chapter II of the Competition Act 1998 will apply to conduct that will only impact on trade within the UK.

For more information on when conduct will affect cross-border trade, see Effect on trade.

In practice there is no distinction between EU and UK law on anti-competitive practices as UK competition law must be interpreted consistently with EU competition law. This means that when reaching decisions in cases, UK courts and regulators must follow EU legislation and the decisions and judgments of the European Commission and the EU courts.

UK merger rules are different to EU merger rules—however, UK merger rules will only apply to transactions that are not caught by EU merger rules (see Relevant merger situation).

UK regulatory structure

The structure for investigating restrictive practices in the UK is summarised below.

For more detail on investigations, see UK investigations—steps in CMA investigations.

The structure for investigating mergers and markets in the UK is summarised below.

For more detail on UK merger investigations see UK merger investigation process and for more detail on UK market investigations see UK market investigations.

Investigations into allegations of anti-competitive behaviour in regulated industries (eg telecoms, energy, water, rail, aviation, healthcare and financial services sectors) can be carried out by the relevant sectoral regulator or the CMA (see Concurrent enforcement of competition law in the UK below).

Appeals against competition (and regulator) decisions can be brought before the Competition Appeal Tribunal (CAT) (a specialist tribunal). Subsequent appeals are available to the Court of Appeal and then the Supreme Court.

Structure of the CMA

The CMA is headed by CMA Board, made up of executive and non-executive directors (including the Chair and one other member of the CMA panel). The current Chief Executive is Andrea Coscelli and the current Chair is Andrew Tyrie.

There are specialist cartel, merger and market units, the Chief Economist's team (made up of competition economists) and the legal team.

Decision making–merger investigations

Phase 1

If, after a phase 1 investigation, the CMA does not have serious competition concerns about a merger, the decision to clear the transaction will be taken within the CMA's Mergers Unit, typically by the Director or Senior Director of Mergers. A decision that there isn't a relevant merger situation will also be taken by a director in the CMA's Mergers Unit.

If, after a phase 1 investigation, the CMA does have competition concerns about a merger, the decision whether the transaction meets the test for referral for a phase 2 investigation is taken at a decision meeting within the CMA. This decision meeting is chaired by the decision maker (typically, the CMA Chief Executive, the Senior Director of Mergers, a Director of Mergers or another CMA Senior Director) and is attended by all present at the case review meeting (CRM). The recommendation from the CRM is presented and the 'devil's advocate' (an independent member of CMA staff from outside the Mergers Unit who is tasked to comment critically on the case team's recommended outcome) in the case will present the opposing view if there is no consensus. After this meeting, the decision maker will decide whether or not the test for referral is met.

Phase 2

All phase 2 investigations are carried out by an inquiry group appointed specifically for the investigation and made up at least three (and typically no more than five) members of the CMA Panel—this mirrors the former Competition Commission procedure with the CMA Panel replacing the Competition Commission panel. The inquiry group acts as the decision maker in phase 2 investigations and also oversees the investigation, including setting the overall direction of the investigation, reviewing evidence and analysis, carrying out site visits and conducting hearings with the parties to the merger and third parties.

The inquiry group for each transaction is appointed by the Chair of the CMA, although this responsibility is generally delegated to the CMA Panel Chair (or one of the Deputy Panel Chairs). Before the inquiry group is appointed, the Chair of the CMA may act in their place (eg in relation to interim orders and initial information requests).

See further, The UK merger investigation process.

Decision making–antitrust investigations

CMA cartel or abuse of dominance investigations are carried out by a dedicated case team drawn from the CMA's Anti-Trust Group and/or the Cartels and Criminal Group (the two groups together making up the Competition Enforcement Directorate), supported by economists and lawyers. The case team is led by a team leader, who is responsible for the day-to-day running of the case. The team leader is, in turn, supervised by project director who directs the case.

A senior responsible officer (SRO, usually a CMA director or senior director) is responsible for interim decisions during an investigation (eg opening an investigation, issuing statement of objections, closing a case, accepting commitments, settling and imposing interim measures) after consulting two senior CMA colleagues, referred to by the CMA as '1 plus 2' decision making (this is not the case decision group). Note—the CMA's Case and Policy Committee will need to be consulted and approve any decisions in relation to commitments and settlement.

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