Competition and Markets Authority

Transcription

1 Competition and Markets Authority Victoria House, Southampton Row, London WC1B 4AD, United Kingdom Tel: Contacts David Currie Chairman Tel: Andrea Coscelli Acting Chief executive Tel: Anne Lambert Panel chair Martin Cave Phil Evans Philip Marsden Simon Polito Alasdair Smith John Wotton Michael Grenfell Executive director, Enforcement Tel: Rachel Merelie Acting Executive director, Markets and Mergers Tel: Erik Wilson Executive director, Corporate Services Tel: Sarah Cardell General counsel Tel: Mike Walker Chief economic adviser Tel: Erika Lewis Director, Governance and Performance, Executive Office Tel: Paul Latham Director, Strategy, Communications and Devolved Nations Tel: Questions and answers How long is the head of agency s term of office? Andrea Coscelli took on the role of acting chief executive following Alex Chisholm s departure in early July 2016; he was previously executive director, Markets and Mergers at the Competition and Markets Authority (CMA). When is he or she due for reappointment? The CMA is currently recruiting for a permanent chief executive. This role is advertised as a fixed-term appointment of three years for newly appointed civil servants and this role is also offered as a three-year loan to existing civil servants

2 Which posts within the organisation are political appointments? The Secretary of State for Business, Energy and Industrial strategy appoints through open competition the chair, the non-executive members of the CMA Board, the chief executive and the panel members of the CMA. The appointments process is governed by rules to ensure the overriding principle of selection based on merit by the well-informed choice of individuals who, through their abilities, experience and qualities, match the needs of the public body in question. Although appointments are made by the secretary of state, the CMA is independent and politically neutral. What is the agency s annual budget? The total budget including depreciation for is 69.4 million. The budget excluding depreciation is 65.9 million. How many staff are employed by the agency? On 31 December 2016, we had 560 members of staff and the full-time enquivalent was To whom does the head of the agency report? The chief executive reports to the board. As a nonministerial government department, the CMA does not report directly to a government minister. The Enterprise and Regulatory Reform Act 2013 created the CMA as a statutory body governed by a corporate board. The board is headed by the chair and currently comprises seven non-executive directors which includes the panel chair and a member of the CMA panel, the chief executive and three executive directors. The board is advised by the general counsel and the chief economic adviser. The CMA is accountable to parliament. Do any industry-specific regulators have competition powers? Yes. The following regulators have competition law powers: the Civil Aviation Authority, in respect of air traffic services and airport operation services; the Office of Communications (Ofcom), in respect of communications (telecommunications, broadcasting and postal services); the Gas and Electricity Markets Authority (Ofgem), in respect of electricity and gas in Great Britain; the Financial Conduct Authority (FCA) in respect to the provision of financial services; the Payment Systems Regulator (PSR) in respect of inter-bank payment transfer systems (the PSR is an independent subsidiary of the FCA); Monitor, in respect of healthcare services in England; the Office of Rail Regulation, in respect of railway services; the Water Services Regulation Authority (Ofwat) in respect of water and sewerage services in England and Wales; and the Northern Ireland Authority for Utility Regulation, in respect of elec tricity, gas and water and sewerage services in Northern Ireland. If so, how do these relate to your agency s role? The sector regulators noted above have concurrent powers with the CMA to enforce the UK and EU prohibitions on anticompetitive agreements and abuse of dominance. Since April 2014, under new legislation, the CMA and the regulators are required to seek an agreement on which of them should handle a case in respect of which there are concurrent powers and, if they cannot agree, the CMA is empowered to allocate the case, either at the outset or while the case is ongoing. The sector regulators also have the power to make market investigation references to the CMA under Part 4 of the Enterprise Act 2002 in relation to the goods or services which fall within their regulated sectors. For both the competition prohibitions and market investigation reference powers, the CMA and the regulators now have enhanced obligations to share information and cooperate, and a new UK Competition Network has been established as a forum for cooperation between the CMA and the regulators on these matters. In this regard, the CMA has also agreed memoranda of understanding with each of the sector regulators that set out the working arrangements in relation to their concurrent competition law powers in the areas in which they have jurisdiction. For merger control, the CMA may contact the sector regulators for their views when assessing mergers in their sphere of influence. For mergers involving NHS foundation trusts, Monitor is under a duty to provide its views. The CMA is not bound by the regulators views but would pay close attention to them. The CMA also has a number of functions under sector-specific legislation, including (depending on the sector concerned) final determinations and appeals regarding regulators decisions and proposals on price caps, licence terms and other regulatory provisions. May politicians overrule or disregard authority s decisions? If they have ever exercised this right, describe the most recent example. Politicians may not overrule or veto the final, statutory decisions of the CMA in specific Competition Act The Handbook of Competition Enforcement Agencies 2017

3 (CA98), markets or merger investigations. However, the secretary of state may, by order, exclude the application of Chapter I and Chapter II of the CA98 in certain circumstances (eg, for the avoidance of conflict with international obligations and on the grounds of public policy). The secretary of state may also intervene in a market case or merger if he or she thinks it might raise one of a limited class of specified public interest considerations. Broadly stated, in those cases, the CMA is responsible for considering and deciding the competition issues (which the secretary of state cannot overrule), but the ultimate outcome of the case depends on decisions of the secretary of state based on the public interest considerations in the case. The Enterprise Act 2002 (EA02) also gives the secretary of state a reserve power to make a market investigation reference if he or she is not satisfied with a CMA decision not to make such a reference. Does the law allow non-competition aims to be considered when your agency takes decisions? As regards antitrust, the CA98 and articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) prohibit anticompetitive agreements and abuses of a dominant position. These are intended to deal with competition considerations (including assessment of any countervailing economic efficiencies or benefits, which may make an agreement lawful where they outweigh the restrictions on competition). However, as noted above, the secretary of state may, by order, exclude the application of Chapter I and Chapter II of the CA98 in exceptional circumstances related to non-competition aims (eg, for the avoidance of conflict with international obligations and on the grounds of public policy). In merger and market cases, consideration may also be given to relevant customer benefits (eg, lower prices, higher quality, greater choice of goods or services, innovation) as part of the assessment process. When deciding on certain remedies following a market investigation reference in a regulated sector, the CMA will, as appropriate, have regard to the relevant statutory functions of the sectoral regulator concerned. As noted above, under the EA02, public interest consider ations may, in certain circumstances, play a role in an assessment of a merger or market investi gation reference, where those considerations lead to an intervention by the secretary of state. Which body hears appeals against the agency s decisions? Is there any form of judicial review beyond that mentioned above? If so, which body conducts this? Has any competition decision by the agency been overturned? The Competition Appeal Tribunal (CAT) hears appeals in respect of certain CMA decisions under the CA98 and the EA02, including decisions: on merger and market investigations under the EA02; on whether any of the competition prohibitions of the CA98 or TFEU have been infringed; in relation to the acceptance, variation, or release of binding commitments under the CA98; and on certain other appealable decisions under the CA98 and EA02, including the issue of or failure to issue interim measures directions and the imposition of administrative penalties for failure to comply with CMA investigatory powers. Further appeals from decisions of the CAT may be possible in certain circumstances. Also, the CAT can, in appropriate cases, request a preliminary ruling from the European Court of Justice under article 267 TFEU. In addition, as a public body, certain CMA decisions can be challenged under ordinary administrative law principles by way of judicial review in the UK High Court. Has the authority ever blocked a proposed merger? If yes, please provide the most recent instances. On 27 June 2014, the CMA confirmed the decision made in 2013 by one of its predecessor agencies, the Competition Commission, that Eurotunnel should be barred from operating its My Ferry Link service further to its proposed merger with Sea Ferries. The decision was upheld on appeal by the CAT. Following the Court of Appeal s overturning of the CAT ruling, the CMA won its appeal to the Supreme Court in December 2015, which had the effect of reinstating the decision and remedies order of the Competition Commission. The CMA also recently prohibited the ICE/Trayport merger and, at the time of writing, this decision was under appeal. Has the authority ever imposed conditions on a proposed merger? If yes, please provide the most recent instances. Since acquiring its powers on 1 April 2014, the CMA has cleared 24 mergers on the basis of the companies offering, and the CMA accepting, acceptable undertakings 387

4 in lieu of a Phase II investigation or the CMA imposing remedies following Phase II investigation that address the identified (actual or risk of) substantial lessening of competition which the CMA found in the course of its investigation. Has the authority conducted a Phase II investigation in any of its merger filings? If yes, please provide the most recent instances. Since assuming powers in 2014, the CMA has commenced 21 in-depth merger inquiries: 19 have concluded (of which five were cancelled and six resulted in remedies). At the start of 2017, the CMA was currently conducting Phase II investigations in two mergers (Vtech/Leapfrog this has since been cleared on 12 January; and Diebold/Wincor). Has the authority ever pursued a company based outside your jurisdiction for a cartel offence? If yes, please provide the most recent instances. Yes. The CMA has imposed civil fines under the Competition Act 1998 against overseas parent companies for infringements of competition law that involve a UK subsidiary. In 2016, the CMA fined both the Irish parent company and its UK subsidiary for the sub sidiary s involvement in the galvanised steel tanks cartel. In international cases, the CMA also liaises closely with the European Commission, the US Department of Justice and other overseas authorities. Recent examples include the CMA s coordination with the French and Italian competition authorities in relation to the authorities investigations into price coordination by model agencies and with the US Department of Justice in connection with separate investigations into price coordination in the online sale of posters in the UK and US. Do you operate an immunity and leniency programme? Whom should potential applicants contact? What discounts are available to companies that cooperate with cartel investigations? The CMA operates a leniency programme under which businesses that admit their involvement in cartel activity may qualify for immunity from fines (or a fine reduction) and their current and former directors and employees may qualify for immunity from criminal prosecution, in each case provided certain conditions are met. Directors of companies that qualify for leniency may also qualify for immunity from director disqualification. (Extensive guidance on the operation of the CMA s leniency programme can be found at uk/guidance/cartels-confess-and-apply-for-leniency.) Is there a criminal enforcement track? If so, who is responsible for it? Does the authority conduct criminal investigations and prosecutions for cartel activity? If not, is there another authority in the country that does? Yes. The criminal cartel offence applies to individuals who engage in hard-core cartel activity, namely agreeing to fix prices, share customers or markets, restrict output or rig bids. In England and Wales, and in Northern Ireland, prosecutions may only be brought by the CMA or the Serious Fraud Office, or with the consent of the CMA. Prosecutions will generally be undertaken by the CMA. In Scotland, prosecutions will be brought by the Crown Office and Procurator Fiscal Service, which is headed by the Lord Advocate. In the past two years, the CMA has secured criminal convictions against two individuals in two separate cartel cases (galvanised steel tanks and precast concrete drainage products). Are there any plans to reform the competition law? The UK competition regime recently underwent significant changes (see below). The government also consulted on options to refine the UK competition regime in summer 2016 but has not yet published a response to the consultation. When did the last review of the law occur? The last significant reform of the competition law regime was effected by the Enterprise and Regulatory Reform Act 2013, which took effect on 1 April In brief, the principal changes introduced included: the creation of the CMA, taking on the competition and certain other functions previously exercised by the Office of Fair Trading and the Competition Commission; in CA98 investigations, new powers for the CMA to interview individuals and a lower threshold for the CMA to impose interim measures; in relation to markets work, new powers for the CMA to investigate practices across markets, to investigate public interest issues in the context of market investigations, and the introduction of shorter statutory timetables for market studies and investigations; in merger investigations, statutory time limits for Phase I investigations, and strengthened or extended powers to prevent pre-emptive integration of merging enterprises and to remedy completed 388 The Handbook of Competition Enforcement Agencies 2017

5 mergers which have led to a substantial lessening of competition; strengthening of the application of competition law in relation to regulated sectors, including introduction of a requirement for sectoral regulators to consider whether enforcement action under the CA98 would be the most appropriate action to promote competition, before using their sectoral powers; a new power for the CMA to impose civil financial penalties on persons for failure to comply with certain investigatory and interim measures powers under the EA02 and CA98; and a new test for the EA02 criminal cartel offence, removing the previous requirement to prove dishonesty, and introducing certain new exceptions and defences to the commission of the offence. The CMA has published extensive guidance on its powers and procedures, which is available on its web pages at Do you have a separate economics team? If so, please give details. The CMA has around 80 economists, econometricians and statisticians. The individuals work within the different business delivery groups across the CMA (the Competition Consumer and Markets Group, Markets and Mergers Support and Advocacy). Has the authority conducted a dawn raid? The CMA often carries out dawn raids. It has the power to seek a warrant to carry out unannounced searches of both business and domestic premises for the purpose of investigating suspected infringements of the Competition Act 1998 or cartel offences by individuals. Under the Competition Act 1998 the CMA also has the power to carry out inspections at business premises with or without notice and require the production of documents. Has the authority imposed penalties on officers or directors of companies for offences committed by the company? If yes, please provide the most recent instances. Individuals that have been directly involved in hardcore cartel activity (horizontal price fixing, market sharing, restricting output or bid rigging) may be investigated and prosecuted for the criminal cartel offence (see above). In addition, the CMA may apply to the court for an order disqualifying the director of a company that has infringed competition law from directorship of or any UK company for a specified period of up to 15 years. The CMA may also accept undertakings from a director, which will have the same effect as a court order. In 2016, for the first time ever, a disqualification was secured under these provisions (for five years, by way of an undertaking). The CMA has produced guidance to help company directors, including non-executive directors, achieve compliance within their organisations (see uk/government/publications/advice-for-companydirectors-on-avoiding-cartel-infringements). What are the pre-merger notification thresholds, if any, for the buyer and seller involved in a merger? The UK has a voluntary, not a mandatory, notification system. However, the CMA has jurisdiction to investigate a proposed merger if: the parties combined share of supply or purchase of particular goods or services exceeds 25 per cent; or the UK turnover of the target business exceeds 70 million. The CMA also has jurisdiction to investigate completed mergers that meet either or both of these thresholds provided it decides within four months of the merger being made public or it being completed (whichever is the later) whether or not to launch a Phase II investigation. Are there any restrictions on investments that involve less than a majority stake in the business? The CMA has jurisdiction over acquisitions that fall short of outright voting control, where one enterprise acquires material influence over the policy of another even if it does not hold the majority of the voting rights in that other enterprise. The CMA will consider a range of factors besides the acquirer s ability to influence the target s policy through exercising votes at shareholders meetings, such as board representation. Further detail is available in the CMA s published mergers guidance