The Dominance and Monopolies Review: United Kingdom
Domestic UK competition law on abuse of dominance substantially mirrors the provisions of Article 102 of the Treaty on the Functioning of the European Union (TFEU). The UK provisions are set out in Chapter 2 of the Competition Act 1998 (the Act). Section 18 of the Act provides that, subject to limited exclusions: 'any conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market is prohibited if it may affect trade within the United Kingdom' (the Chapter 2 Prohibition).
While the UK was still a member of the EU, UK and EU competition law (including Article 102 of the TFEU) both applied in the UK. The transition period that was in place following the United Kingdom's withdrawal from the European Union and European Economic Area on 31 January 2020, during which EU competition law continued to apply in the UK, ended on 31 December 2020. Since the end of the transition period, EU competition law no longer applies directly in the UK.
Pre-existing EU legislation and case law that were in force on 31 December 2020 nevertheless continue to have binding legal effect in the UK as 'retained EU law'. Under the provisions of the European Union (Withdrawal) Act 2018, EU-derived domestic legislation (e.g., UK law implementing EU directives) remains in force, direct EU legislation (e.g., EU regulations and European Commission (EC) decisions) forms part of domestic law, and decisions of the Court of Justice of the European Union are given the same binding and precedent status as judgments of the UK Supreme Court. Retained EU law remains in force unless and until it is overturned by a judgment of the Supreme Court or certain appeal courts or repealed by UK legislation.
For antitrust investigations that were ongoing at the end of the transition period, the EC retains exclusive jurisdiction over the UK aspects of the investigation (however long those proceedings take to complete, provided it has already opened formal proceedings before the transition period ended) and retains the power to enforce remedies in these cases, unless it explicitly agrees to transfer responsibility to the UK Competition and Markets Authority (CMA) or a concurrent UK competition authority.2 For investigations starting after the end of the transition period, the UK authorities now have the power to investigate the UK aspects of the case, even if the same conduct is being investigated at EU level, and so will likely carry out abuse of dominance (and other) investigations in parallel with the EC. In addition, conduct that took place before the end of the transition period may still be subject to private actions in the UK courts alleging breaches of EU law.
Public enforcement of UK competition law is carried out primarily by the CMA. In addition to the CMA, the following sectoral regulators have the power to enforce competition law in their sectors: the Civil Aviation Authority, the Financial Conduct Authority, NHS Improvement,3 the Northern Ireland Authority for Utility Regulation, the Office of Communications (Ofcom), the Office of Gas and Electricity Markets (Ofgem), the Office of Rail and Road (ORR), the Payment Systems Regulator and the Water Services Regulation Authority (Ofwat).
While the UK was part of the EU (and during the transition period), the UK competition authorities and courts were required to interpret the relevant provisions of the Act consistently with EU competition law wherever possible, and to have regard to relevant decisions and statements of the EC. This principle is now limited to ensuring consistency with retained EU law (i.e., EU law that was in force on 31 December 2020 and that has not since been overturned or repealed in the UK). The CMA also has regard to its own substantive and procedural guidance (including previous Office of Fair Trading (OFT) guidance that the CMA has formally adopted).4 These include:
- 'Abuse of a dominant position', December 2004;
- 'Assessment of market power', December 2004; and
- 'Guidance on the CMA's investigation procedures in Competition Act 1998 cases', November 2020.
Another significant feature of the UK competition regime is that the UK has a specialist competition court, the Competition Appeal Tribunal (CAT). Any person who is found to have infringed the Chapter 2 Prohibition by the CMA or a regulator has a right of appeal to the CAT.5 The CAT can also hear follow-on damages claims in competition cases and, since October 2015, has had the power to hear stand-alone claims for damages or injunctive relief, or both. The civil courts can also hear competition claims, but may transfer cases or parts of cases to the CAT.
Separately, the CMA has the power to investigate markets as a whole, by carrying out market studies. At the end of a market study, the CMA can make recommendations to businesses and government, or initiate enforcement action under other statutory powers (including the Chapter 2 Prohibition). If the CMA has reasonable grounds for suspecting that a feature of a market is preventing, restricting or distorting competition, it can initiate an in-depth market investigation. A market investigation can also be initiated by any of the concurrent regulators (listed above) or by the Secretary of State. Following a market investigation, the CMA has the power to tackle any features having an adverse effect on competition (including unilateral conduct features) by imposing a wide range of remedies. The identification of anticompetitive features in a market investigation is not a finding that market participants have infringed the law, and remedies are intended to be prospective rather than punitive.
Year in review
i Levels of public enforcement
The CMA has investigated relatively few dominance cases, albeit with a modest increase in activity since 2016. Two main reasons are usually cited to explain this relative lack of enforcement: (1) cross-border cases affecting the United Kingdom often fell to be investigated by the EC, depriving the CMA of jurisdiction to investigate the same conduct in parallel; and (2) cases involving natural monopolies generally fall to be investigated by the concurrent sectoral regulators. In addition, the CMA can investigate unilateral behaviour through market studies and investigations, which allow it to address perceived competition concerns in a market without the need for formal enforcement action.
Government reforms have sought to encourage greater use of competition law enforcement by the sectoral regulators in particular. These regulators have a duty to apply ex post competition law in preference to ex ante regulation where possible. The government has placed a responsibility on the CMA to monitor the work of sectoral regulators and, if appropriate, take enforcement action in their sectors. The CMA is also obliged to publish an annual report on the functioning of the concurrency regime as soon as practicable after the end of each financial year, and the Secretary of State retains a right to remove concurrent powers from sectoral regulators if they are not used.
In February 2016, the National Audit Office (NAO) published a critical report into the UK competition regime, which strongly encouraged the CMA and the concurrent sectoral regulators to find ways to increase levels of competition enforcement. CMA enforcement activity (in dominance cases and more generally) increased following the publication of the NAO report, including three dominance cases opened in the 12 months after the NAO's report was published. In 2020, however, the CMA did not open any new dominance cases, although it did open two new dominance cases in the first quarter of 2021. This relative lack of activity likely reflects: (1) a focus on resolving cases opened during the flurry of activity immediately after the NAO report; and (2) the diversion of CMA resources to deal with planning for the UK's withdrawal from the EU and proposals for reform, discussed in more detail in Section VIII. Although the CMA states in its 2021 Annual Plan that it has a 'substantial volume of ongoing work', the majority of these cases relate to enforcement of the Chapter 1 Prohibition (cartels and anticompetitive agreements) rather than Chapter 2. Moreover, the 2021 Concurrency Report shows that only two of the ongoing eight investigations in the regulated sectors are being pursued by the CMA, rather than the concurrent regulators (although none of these cases relates to suspected abuse of dominance).
The CMA leadership spent much of 2019 and 2020 preparing for Brexit and positioning the UK's withdrawal from the EU as an opportunity to step out of the EC's shadow and establish the CMA as a leading global agency.6 The CMA's resources have also expanded to meet the demands of its expected post-Brexit responsibilities. The CMA acknowledged in its 2021 Annual Plan, however, that the UK's withdrawal from the EU is likely to result in a significant increase in its workload, and that its 'ability to launch major new discretionary projects [including Chapter 2 investigations] over the coming year may be more limited than in the past'. It nevertheless asserts that it is well prepared 'to take on new post-Brexit responsibilities'.
ii Major developments in public enforcement
The CMA and sectoral regulators issued statements of objections and supplementary statements of objections in three dominance cases, accepted commitments in one case, and closed two cases in 2020 and early 2021. There were no infringement decisions in dominance cases in 2020. There were also developments in three appeals of CMA and regulator decisions: the CAT upheld an abuse of dominance decision by Ofcom against Royal Mail and refused Royal Mail permission to appeal to the Court of Appeal; the European Court of Justice (ECJ) issued a judgment on a preliminary reference made by the CAT in the context of the CMA's infringement decision against GlaxoSmithKline (GSK) and others; and the Court of Appeal upheld the CAT's judgment quashing the CMA's infringement decision against Pfizer and Flynn Pharma.
Infringement decisions, statements of objections and commitments decisions
In February 2020, the CMA issued a supplementary statement of objections in relation to its hydrocortisone investigations. Hydrocortisone tablets are the primary treatment for people suffering from Addison's Disease. The CMA had been conducting three separate investigations into alleged excessive and unfair pricing, anticompetitive agreements and abusive conduct in relation to the supply of hydrocortisone tablets, and had issued statements of objections in all three cases.
The supplemental statement of objections combined these investigations and revised certain aspects of the CMA's allegations, taking into account the further evidence it had subsequently obtained. The CMA continues to allege that Auden Mckenzie charged excessive and unfair prices for 10mg and 20mg hydrocortisone tablets between October 2008 and July 2018. In addition, the CMA alleges that Auden Mckenzie entered into an anticompetitive agreement with Waymade from 2011 to 2015 under which Auden Mckenzie made monthly payments to Waymade to stay out of the market for 20mg hydrocortisone tablets. Third, the CMA alleges that Auden Mckenzie entered into similar agreements with Waymade and Advanz Pharma relating to 10mg hydrocortisone tablets. The CMA has provisionally found that these payments constituted an abuse of a dominant position by Auden Mckenzie.
In July 2020, the CMA issued a supplementary statement of objections in relation to alleged excessive pricing by Advanz Pharma (formerly Concordia) of liothyronine tablets in the UK. The supplementary statement addresses issues arising from the Court of Appeal's judgment of 10 March 2020 in the Phenytoin litigation,7 a case that relates to excessive and unfair pricing in the pharmaceuticals sector. The CMA continues provisionally to find that Advanz Pharma breached UK and EU competition law from at least 1 January 2009 to at least 31 July 2017 by charging excessive and unfair prices for liothyronine tablets in the UK.
This is the second supplementary statement of objections issued by the CMA since the original statement of objections was issued in November 2017. The first supplementary statement of objections issued in January 2019 reduced the period under investigation by two years to around eight years and reduced the scope of the price increase under investigation from 6,000 per cent to 1,605 per cent, to reflect the judgment issued by the CAT in June 2018 in the Pfizer/Flynn case (which found that the CMA had misapplied the legal test for determining excessive prices).
In September 2020, Ofgem issued a statement of objections in relation to its investigations into PayPoint. PayPoint provides over-the-counter (OTC) top-up services to prepayment energy customers. Ofgem opened an investigation in August 2017 into PayPoint's conduct in relation to the provision of OTC payment services.
The statement of objections sets out Ofgem's provisional view that PayPoint breached UK and EU competition law by abusing a dominant position. Ofgem alleged that PayPoint held a dominant position in the market for OTC payment services for prepayment energy customers for at least the period running from April 2009 to October 2018. Ofgem provisionally found that exclusivity clauses included in most of PayPoint's contracts with energy suppliers and retailers, which limited their ability to use rival payment services, excluded PayPoint's competitors from the market and therefore amounted to an abuse of a dominant position.
PayPoint now has the opportunity to make representations to Ofgem on the statement of objections before Ofgem reaches a decision.
In December 2020, the CMA accepted commitments from Essential Pharma in relation to its conduct in the supply of lithium carbonate medicines in the UK. Essential Pharma sells its lithium-based medicines for treating bipolar disorder in the UK under the brand names Priadel and Camcolit.
In October 2020, the CMA launched an investigation into whether Essential Pharma's intention to discontinue the supply of Priadel, thus requiring patients to switch to other, more expensive treatments such as Camcolit, constituted an abuse of a dominant position. The Department of Health and Social Care (DHSC) requested that the CMA impose 'interim measures' to pause the withdrawal of Priadel while the investigation was ongoing. Essential Pharma paused its withdrawal of Priadel following the opening of the CMA's investigation, however, and agreed on a new price for Priadel with the DHSC.
In addition, to address the CMA's concerns, Essential Pharma committed: (1) to ensure appropriate and continued supplies of Priadel to the UK on the terms periodically agreed with the DHSC; (2) not to serve a discontinuation notice to the DHSC relating to Priadel; and (3) to refrain from practices having the effect that the number of tablets of Priadel commercialised in the UK would be limited or reduced to a level that would not meet the needs of UK patients, or may cause the UK marketing authorisation in respect of Priadel to be withdrawn, revoked, suspended or varied. These commitments will last for five years. The CMA's decision to accept Essential Pharma's commitments brought the formal proceedings in this case to a conclusion after less than three months.
Conclusion of cases without adopting infringement or commitments decisions
In July and September 2020, the CMA closed all four of its investigations in relation to the suspected charging of excessive and unfair prices for hand sanitiser products during the coronavirus pandemic. The CMA had opened four investigations into four pharmacies and convenience stores in June 2020. One investigation was closed as there were no grounds for action (with the CMA finding that the price that the party charged for hand sanitiser was not excessive under competition law), and the other three investigations were closed on administrative priority grounds, in line with the CMA's prioritisation principles.
Entertainment and recreation services sector
In August 2020, the CMA closed its investigation relating to alleged anticompetitive agreements and suspected abuse of dominance by various parties in the entertainment and recreation services sector. The CMA decided to close this investigation on administrative priority grounds having considered its prioritisation principles. The case was initially opened in August 2019.
GSK, Generics (UK) and others
In January 2020, the ECJ issued its judgment in response to the CAT's request for a preliminary ruling in GSK's appeal of the CMA's February 2016 decision to impose a £45 million fine on GSK and other pharmaceutical manufacturers.8
GSK was the patent holder for paroxetine, an antidepressant. The CMA found that, between 2001 and 2004, GSK paid generic pharmaceutical manufacturers to delay their entry into the market. The CMA found this conduct infringed both Articles 101 and 102 of the TFEU, as well as the Chapter 1 Prohibition. GSK and the generic manufacturers appealed this decision to the CAT in April 2016. In March 2018, the CAT issued an intermediate judgment and also requested a preliminary ruling from the ECJ. On matters related to the infringement of Article 102, the CAT asked the ECJ: (1) how to define the relevant product market; (2) whether entry into these agreements constituted an abuse; and (3) whether the benefit brought about through price reductions could outweigh any anticompetitive effects.
In response to question (1), the ECJ found that the appropriate product market encompassed suppliers not already in the market provided they had a firm intention and inherent ability to enter. The ECJ also found that patents did not present an 'insurmountable barrier' to entry. In response to question (2), the ECJ found that entering into these agreements could constitute an abuse of dominance if the dominant entity's conduct damaged the competitive structure of the market beyond the effects of the specific agreements. In response to question (3), the ECJ found that this conduct could, in principle, be justifiable and that the beneficial effects on competition must be taken into consideration regardless of the dominant firm's objectives. The case will now be considered further by the CAT in light of the ECJ's judgment.
Pfizer and Flynn
In 2016, the CMA imposed record fines on Pfizer and Flynn for charging excessive prices for phenytoin sodium capsules, an anti-epileptic drug. In July 2018, that decision was quashed by the CAT on the basis that the CMA had applied the wrong legal test and had failed to consider appropriately the economic value of the product.9 The CMA (and, on one ground, Flynn) appealed the CAT's judgment to the Court of Appeal.10 In March 2020, the Court of Appeal upheld the CAT's judgment that the case should be remitted to the CMA, though it agreed with the CMA on some issues (which will affect the remitted investigation) and the CMA welcomed the judgment as a 'good result'.
The CMA's first ground of appeal related to the legal test for establishing excessive prices established by the European Court in United Brands.11 The CMA had submitted that the need to show that prices were 'unfair', one limb of the test, provided the competition authority with two alternative methods of assessment: either the price was 'unfair in itself' or the price was 'unfair when compared to competing products'. The CAT and Court of Appeal rejected this approach, holding that the CMA could not ignore prima facie relevant evidence that the price was fair based upon the approach not used by the authority. While the competition authority enjoys a margin of discretion, it is under a duty to evaluate such evidence. The Court of Appeal accepted, however, that there is no general duty to perform a 'full' investigation (a term the CAT had used inconsistently in its judgment) in all cases; the extent of the duty will be affected by the nature, extent and quality of the evidence adduced by the company under investigation.
Second, the CMA argued that the CAT had erred in requiring the CMA to use a hypothetical benchmark price or range of prices as part of its evaluation of whether an actual price is excessive. The Court of Appeal agreed with the CMA, holding that 'the choice of benchmark is for the competition authority to choose and can be based upon the costs of the undertaking being investigated or it can be based upon comparables such as the prices charged by the same or different undertakings in the same or different geographical markets or indeed any other benchmark or combinations thereof capable of providing a “sufficient” indication that the prices charged are excessive and unfair'.
The CMA's third ground of appeal concerned the limits on the CAT's jurisdiction to reject findings or conclusions that amounted to 'judgment calls' of the authority. The Court of Appeal rejected the CMA's arguments, holding that while the CMA has a margin of discretion, the CAT 'has a merits jurisdiction as to both law and fact and upon the basis of established case law it is not bound to defer to the judgment call of a competition authority. It is empowered under the legislation to come to its own conclusions on issues of disputed fact and law and can hear fresh evidence, not placed before the CMA, to enable it to do so.'
Fourth, the CMA argued that the CAT was wrong to find that the CMA had attributed a nil value to patient benefit in it assessment. The Court of Appeal rejected this ground as it amounted to the challenge of a finding of fact (which could not therefore be appealed), although Green L J disagreed with the CAT's view that assessing the 'economic value' of the product was a discrete requirement of the United Brands test. The CMA could determine how it factored this assessment into its analysis.
Finally, Flynn appealed certain of the CAT's findings out of concern (according to the Court) that the CMA in its remitted investigation would treat various ostensible findings by the CAT as definitive and binding. The Court of Appeal rejected Flynn's arguments because the entire issue of abuse had been remitted to the CMA, which reopened its investigation in June 2020.
iii Current abuse of dominance investigations
The CMA and sectoral regulators are currently investigating eight suspected abuse of dominance cases, summarised in the table below.
|Sector||Investigating authority||Conduct||Case opened*|
|Rail||Office of Rail and Road||Investigation into the provision of certain training services in the passenger rail transport sector||March 2021|
|Communications||CMA||Suspected abuse of dominant position by Apple in relation to the distribution of apps on iOS and iPadOS devices; in particular, the terms and conditions governing app developers' access to Apple's App Store (including terms that mean they can only distribute their apps to iPhones and iPads via the App Store)||March 2021|
|Communications||CMA||Possible abuse of dominant position by Google as a result of its proposal to disable third-party cookies on the Chrome browser and Chromium browser engine and replace them with a new range of 'privacy sandbox' tools||January 2021|
|Water||Ofwat||Suspected abuse of dominant position by Thames Water Utilities Limited as a result of the approach that Thames Water has taken when installing digital smart meters and the impact that this has had on providers of data-logging services and their customers||June 2019|
|Energy||Ofgem||Suspected abuse of a dominant position by PayPoint plc, a company providing payment services to the energy industry, by including certain contractual terms that conferred exclusivity to PayPoint||August 2017|
|Pharmaceuticals||CMA||Suspected unfair pricing in the supply of liothyronine tablets by Concordia||October 2016|
|Pharmaceuticals||CMA||Suspected abuses of dominance by Auden McKenzie and Actavis UK (inducement to delay entry and excessive pricing) in relation to hydrocortisone tablets, as well as suspected anticompetitive agreements between Concordia and Actavis UK||March 2016|
|Pharmaceuticals||CMA||Remitted investigation into alleged excessive pricing in the supply of phenytoin sodium capsules||May 2013|
|* 'Case opened' refers to the date on which the authority opened its investigation (where known) or announced that it had opened an investigation|
iv Major developments in private actions
Achilles Information Limited v. Network Rail Infrastructure Limited
In July 2019, the CAT ruled that Network Rail's requirement that those persons seeking to access its infrastructure must obtain supplier assurance exclusively through the Railway Industry Supplier Qualification Scheme (RISQS) constituted a breach of the Chapter 1 and Chapter 2 Prohibitions.12 Network Rail is the owner and operator of most of the mainline rail infrastructure in Great Britain. Achilles provides supplier assurance services in the UK. Achilles argued that the 'RISQS-only' assurance process was abusive because it obliged all suppliers who needed access to Network Rail infrastructure to use RISQS, even if they are not working on the infrastructure itself (for example, contractors who merely require trackside access).
The CAT's judgment was premised on the assumption that Network Rail holds a dominant position in the market for the operation and provision of access to national rail infrastructure in Great Britain. The CAT concluded that the 'RISQS-only' rule causes significant foreclosure of demand in a significant segment of the market for supplier assurance services (a related market). The CAT dismissed Network Rail's arguments that a tender process held 2016 was evidence of sufficient competition and that its conduct was consistent with normal conditions of competition as evidenced in the European rail industry. The CAT also rejected Network Rail's argument that its conduct was objectively justified. The CAT was unconvinced that the safety purposes of the 'RISQS-only' rule could not be met by less restrictive requirements or that the rule generated sufficient cost efficiencies to offset any loss of competition.
Network Rail appealed the CAT's judgment to the Court of Appeal. Network Rail argued that the CAT erred in law in finding that there was an abuse of dominance, in particular, because: (1) the CAT's anticompetitive effects analysis was flawed; (2) the evidence was contrary to its conclusion in relation to the effects of the periodical tender process; (3) it erred in law in finding that a dominant company need not benefit commercially from the conduct complained of for it to be found to be abusive; and (4) it erred in law in finding that the conduct was an abuse without finding that Network Rail's taking supplier assurance from Achilles was indispensable or essential to enable Achilles to be active in supplier assurance in the GB rail sector or safety-critical industries in the United Kingdom.
In March 2020, the Court of Appeal rejected Network Rail's appeal on all six grounds.13 Only one ground of appeal, comprising four separate arguments, related to the Chapter 2 Prohibition (abuse of dominance) findings.
- First, Network Rail argued that the CAT's anticompetitive effects analysis was flawed. Consistent with its approach to Network Rail's appeal of the Chapter 1 infringement decision, the Court of Appeal held that 'the CAT was clearly entitled . . . to come to the conclusion it did on the basis of the evidence'.
- Second, Network Rail contended that the evidence was contrary to the CAT's conclusion in relation to the effects of the periodical tender process. The Court of Appeal held that Network Rail had failed to show that 'there was no evidence capable of sustaining the conclusion reached, or that the conclusion is plainly wrong, in the sense that it is one that no reasonable judge or tribunal could have reached'.
- Third, Network Rail argued that the CAT erred in law in finding that a dominant company need not benefit commercially from the conduct complained of for it to be found to be abusive. The Court upheld the CAT's application of the principles in Aeroports de Paris and Arriva the Shires and rejected Network Rail's argument that 'a person on a separate market from that of the dominant supplier can only complain of abuse of that dominant position if it is in a situation of economic dependence on the supplier'.
- Finally, Network Rail argued that the CAT had erred in law by failing to recognise that the present case was one of refusal by Network Rail to supply a new customer, as opposed to a refusal to contract with an existing customer (meaning that a higher legal test should apply). The Court of Appeal cursorily rejected this argument as it was 'completely unrealistic to treat Achilles as if it were a wholly new customer of Network Rail's. . . . What Achilles now wishes to do, in substance, is to resume its long-standing position as a substantial supplier of such services to companies requiring access to Network Rail's infrastructure, which it is currently prevented from doing by the existence of the RISQS-only rule.'
Strident Publishing Limited v. Creative Scotland
In April 2020, the CAT handed down its judgment on jurisdiction in a claim for damages under Section 47A of the Act.14 Strident Publishing Limited, a book publisher, claimed that Creative Scotland had abused its dominant position by providing 'investment finance' to three publishers as part of its mandate to support artistic projects.
The CAT found that Creative Scotland's provision of grants to the publishers in exercise of its statutory function did not amount to an economic activity carried on by an undertaking, and the CAT, therefore, did not have jurisdiction. First, the CAT was not convinced that Creative Scotland had engaged in an activity that was different from its activity of awarding grants to other applicants. The CAT found that the function of providing public funding to the arts involved the exercise of powers that are typically those of a public authority, suggesting that the activity was not an economic activity carried on by an undertaking. In addition, the CAT found that the defendant did not operate for profit and that no private entity could carry out the same function. Finally, the CAT found that the defendant's power derived directly from legislation and it was accountable to, and under the control of, Scottish Ministers.
In July 2020, Strident Publishing's application to appeal the judgment was refused by the CAT.
Unwired Planet v. Huawei
In August 2020, the UK Supreme Court handed down its judgment in relation to a standard-essential patent (SEP) dispute between Huawei and Unwired Planet.15
Unwired Planet is a patent assertion entity that acquires and licenses patents. In 2013, it acquired telecoms patents from Ericsson, 276 of which were declared essential to ETSI, a not-for-profit European standards organisation. In 2014, it sought an injunction against Huawei, Samsung and Google, based on five UK patents from the Ericsson portfolio. Huawei had previously licensed the patents from Ericsson but even though the licence expired in 2012, it nevertheless continued to use the patented technology. At trial, the judge had to decide whether the terms of the parties' latest licensing offers to each other were fair, reasonable and non-discriminatory (FRAND) and, if not, to determine the terms that would be FRAND. The judge set worldwide licence terms, holding that a UK-only licence between the parties would not be FRAND because a willing licensor with a global portfolio and a willing licensee with almost global sales would reasonably agree a worldwide licence. The judge imposed an injunction that would apply if Huawei did not accept the terms he had set.
Huawei appealed the judgment but failed in the Court of Appeal on all grounds (except that the Court of Appeals found that a FRAND royalty rate can be a range rather than a single percentage). It then appealed to the Supreme Court.
The Supreme Court unanimously dismissed Huawei's appeal. The judgment has five principal holdings.
- Huawei v. ZTE16 provides a 'safe harbour' for SEP holders seeking injunctions against infringers, but not a set of mandatory requirements. The ECJ in Huawei v. ZTE found that an SEP owner will not abuse its dominant position by seeking an injunction prohibiting the infringement of a patent as long as it has previously alerted the infringer of the infringement and presented a written offer for a licence on FRAND terms, such offer then being refused by the infringer. The Supreme Court rejected Huawei's argument that Unwired Planet had failed to comply with this requirement because it had not made a FRAND licence offer to Huawei before issuing proceedings for injunctive relief, accepting that the Huawei v. ZTE guidance should not be treated as a set of prescriptive rules.
- The non-discrimination prong of FRAND does not impose obligations that are separate from the 'fair and reasonable' prong and does not prohibit differing royalties for similarly situated licences, nor does it impose a 'most-favourable licence' obligation. The Supreme Court took the view that price discrimination is the 'norm as a matter of licensing practice' as there may be a number of commercial justifications for differing rates on comparable licences (such as an 'early-bird discount' or 'fire sale' deal). However, royalties should not be adjusted based on the 'individual characteristics of a particular market participant' and there should be a 'single royalty price list available to all'.
- An injunction may be a proportionate remedy for infringement of a UK patent unless a worldwide licence is taken. The Supreme Court found that UK-only damages are inadequate to compensate for failure to achieve a worldwide licence.
- English courts have jurisdiction to enjoin infringement of a UK patent even if the infringer accepts a UK licence on FRAND terms set by the courts, but resists a worldwide licence. The Supreme Court held that requiring worldwide licensing is aligned with foreign courts' approaches to SEPs and FRAND licensing. The Supreme Court perceived a willingness, in principle, for foreign courts to grant an injunction against the infringement of a national SEP if an implementer refuses a licence on FRAND terms and to determine the FRAND terms of worldwide licences.
- England is a more appropriate forum for the dispute than China. The Supreme Court held that the Chinese courts have not yet found that they have jurisdiction to determine the terms of a global FRAND licence without the parties' agreement.
Secretary of State for Health and others v. Servier Laboratories Ltd and others
In May 2011, the Secretary of State for Health brought an action in the High Court against Servier for damages for breach of Articles 101 and 102 of the TFEU. Servier successfully applied for a stay of those proceedings as the EC had initiated an investigation in 2009 relating to a similar breach of competition law. In July 2014, the EC found that Servier had infringed both Articles 101 and 102 by paying generic pharmaceutical manufacturers to delay their entry into the market for the supply of perindopril. On appeal, the General Court found in December 2018 that the EC had erred in finding an abuse of dominance as it had not established the relevant product market.17 The General Court found that the EC wrongly considered that perindopril differed from other angiotensin-converting enzyme inhibitors and that the EC had erred in defining a market limited to the perindopril molecule alone.
The trial on the preliminary issues in the High Court case was due to be heard in October 2019. In advance of this trial, Servier sought to rely on the findings and statements in the General Court's judgment, which, it argued, were binding on the High Court as res judicata. In Servier's submission, adducing evidence and arguments that were inconsistent with these findings would constitute an abuse of process. The High Court held that findings of fact made by the General Court that were inseparable from the operative part of its judgment were binding as res judicata.18 As such, the finding that the relevant product market cannot be limited to the perindopril molecule alone was binding. Other findings of fact that Servier sought to rely on, however, were not binding; it is therefore not an abuse of process to adduce evidence inconsistent with these findings. Servier appealed the High Court's judgment to the Court of Appeal, which dismissed the appeal in its entirety.19
In July 2019, Servier was granted permission to appeal to the Supreme Court. In November 2020, the Supreme Court dismissed the appeal, holding that the EU principle of absolute res judicata only applies to judicial decisions that have become definitive20 (in this case, due to pending appeals, the General Court's findings are not yet definitive, and may never become definitive).
Preventx Limited v. Royal Mail Group Limited
In July 2020, Preventx filed an application before the High Court for an injunction against Royal Mail. Royal Mail had indicated that it would destroy any future parcels returned via Freepost, as it sought to terminate its Freepost agreement with Preventx and migrate Preventx to its tracked return service. Preventx alleged that Royal Mail was abusing its dominant position by forcing the company to migrate to the tracked return service.
The High Court granted an injunction in favour of Preventx in August 2020, finding that (1) Royal Mail's requirement that the sender's name and address be included on the returns label together with the word 'tracked', (2) the threat to destroy any returns sent by Freepost or charge a price substantially higher than the tracked return service price to process them (which in effect constituted a coercive threat), and (3) the short notice period given to Preventx to migrate to its tracked return service, could constitute an abuse of dominance.
This was settled between the parties in February 2021.
Epic Games, Inc and others v. Apple Inc and another
In December 2020, Epic Games initiated a claim against Apple Inc (Apple) and Apple (UK) Limited (Apple UK) before the CAT, alleging that the defendants abused their dominant position in the iOS app distribution market and the iOS in-app payment processing market. Epic Games sought permission from the CAT for service out of jurisdiction to Apple.
In February 2021, the CAT rejected the application for permission to serve the proceedings on Apple out of jurisdiction.21 The CAT found that the substance of the case is a dispute between two large US companies, and therefore held that the UK was not clearly nor distinctly the more appropriate forum; instead, the US is an appropriate forum for this dispute. First, the CAT found that there is no serious issue to be tried as against Apple UK (as evidence showed that Apple UK mainly provides services to other companies in the Apple group and provides support to UK app developers, but is not a party to the app development agreement between Apple and Epic Games), and therefore the effective defendant is Apple, which is based in the US. In addition, the main claimant is also based in the US. Thus, the factual witnesses would virtually all be in the US. Second, there were already ongoing antitrust proceedings initiated by Epic Games against Apple in the US. The issues under UK competition law to which factual and economic evidence would have to be given would substantially overlap with the evidence that will be given in the US proceedings, which would result in additional costs if an action were to proceed before the CAT in parallel. Third, the CAT found there to be no reason why a US federal court would have difficulty in understanding and applying UK competition law with the assistance of expert evidence. Fourth, there was no evidence that Epic Games' claim under UK competition law was not justiciable in the US or that the US courts would not grant injunctive relief extending to the UK. Fifth, on balance, the applicable grounds of jurisdiction did not point to the UK as the most appropriate forum, given that the acts in question flow directly from the US with an international aspect.
While the claim against Apple UK may continue (as Epic Games does not require permission to serve in the jurisdiction), Epic Games has noted that it will reconsider pursuing this case after the resolution of the US proceedings.
In March 2019, the CAT announced that it had received two applications to commence collective proceedings on behalf of affected rail passengers holding Transport for London (TfL) zonal tickets (Travelcards). The applications allege that three UK train operators have abused their positions of dominance. Both applications were made on a stand-alone basis (they do not follow on from a prior infringement decision by a competition authority).
The proceedings arise out of 'boundary fares', which are fares for travel to and from the outer boundaries of TfL's rail zones (which cover the Greater London area), and allegations that the rail companies failed to make boundary fares sufficiently available for sale or failed to ensure customers avoided paying for parts of their journeys twice. The proposed class of claimants consists of rail passengers who were effectively compelled to pay twice for the parts of their rail journeys that overlapped with the validity of their Travelcards. They are collectively represented by the applicant, Justin Gutmann. The respondent rail companies are First MTR South Western Trains Limited and Stagecoach South Western Trains Limited, and London and South Eastern Railway Limited.
In June 2019, the CAT granted the defendants' application for a stay of the main hearing pending the appeal to the Supreme Court in Merricks v. Mastercard Inc, which concerns the certification of collective proceedings. Following the Supreme Court's judgment in Merricks v. Mastercard Inc22 in December 2020, the case management conference took place in January 2021, and the hearing took place in March 2021, but the judgment has yet to be issued.
Other cases before the CAT and the High Court
|NVIDIA Corporation and others v. Qualcomm Inc and others||Predatory pricing and loyalty-inducing rebates. The same allegations are also being investigated by the European Commission, which issued two statements of objections in December 2015||Pending: claim launched in December 2015|
|Infederation Ltd v. Google Inc and others||Alleged abuse of dominance on the market for the provision of internet search services or the market for the provision of online search advertising services, or both||Pending: claim issued in 2012|
|Sportradar and others v. Football DataCo and others||Alleged abuse of dominance by Football DataCo, the 'sole supplier' of live data relating to high-level football matches, by granting Betgenius five-year exclusive rights to use live match data for supply of 'sports data and sports betting services'||Pending: claim launched in February 2020. The defendants applied to transfer the action to the High Court, on the basis that their counterclaim raises issues that is outside the jurisdiction of the CAT. In December 2020, the CAT refused such transfer application, holding that this can be addressed by sensible case management, and by having this action in the CAT being chaired by the same High Court judge*|
|Churchill Gowns Limited and Student Gowns Limited v. Ede & Ravenscroft Limited and Others||Alleged abuse of dominance in the market for supply of academic dress (comprising a gown, hood and mortar board) to university students for use at graduation ceremonies in the UK through the conclusion of exclusivity agreements with a number of UK universities||Pending: claim issued in May 2020|
|Regus Group Services Ltd and another v. Datasite UK Ltd||Alleged abuse of dominance by Datasite UK Ltd in the market for the provision of virtual data room services in multiple or high-value complex transactions, by charging unfair or excessive prices, or by discriminating between Regus Group Services Ltd and other customers of Datasite||Pending: claim issued in October 2020|
|Kerilee Investments Limited v. International Tin Association Limited||Alleged abuse of dominance by the International Tin Association Limited by excluding Kerilee from the trade association without due process or justifiable reason||Pending: claim issued in December 2020|
|Epic Games, Inc and others v. Alphabet Inc, Google LLC and others||Alleged abuse of dominance in Android app distribution market in Android in-app payment processing||Pending: claim issued in December 2020|
|Justin Le Patourel v. BT Group PLC||Application to bring opt-out collective proceedings for damages caused by the alleged breaches of statutory duty by BT Group PLC by charging excessive prices to its customers||Pending: claim issued in January 2021|
|Consumers' Association (Which?) v. Qualcomm Incorporated||Application to bring opt-out collective proceedings for damages caused by Qualcomm Incorporated's alleged abuse of dominance in LTE chipsets by imposing supracompetitive royalties and refusing to license its patents to any rival chipset manufacturers||Pending: claim issued in February 2021|
|* CAT 25|
Market definition and market power
The substantive assessment of market definition and market power in the United Kingdom is substantially similar to EU law. The one difference between EU and UK law is that under the Chapter 2 Prohibition there is no need to show a cross-border effect, and no minimum market size threshold: a 'dominant position' refers to a dominant position in the United Kingdom or any part of the United Kingdom. This means that dominant positions can be found even for small suppliers in small markets.
The assessment of abuse in the United Kingdom is substantially similar to EU law. The UK left the EU on 31 January 2020 and EU competition law ceased to apply directly in the UK from the end of the transition period on 31 December 2020.23 Most pre-existing EU competition law nevertheless continues to have binding effect under UK domestic law as 'retained EU law' and will do so unless and until specific provisions are overturned by the Supreme Court or certain appeal courts or repealed by other legislation.24 Moreover, as significant parts of UK competition law are closely modelled on EU law, the interpretation of EU law is also likely to provide a highly persuasive guide to the interpretation of UK law for the foreseeable future.
There is no exhaustive list of abuses under Section 18 of the Act (the equivalent of Article 102 of the TFEU).25 Any conduct by a dominant undertaking that excludes competitors or exploits customers is potentially abusive,26 unless that conduct is objectively justified. Moreover, the High Court has held that conduct should be looked at 'in the round', rather than seeking to identify on a narrow basis whether conduct departs from 'competition on the merits'.27
ii Exclusionary abuses
Enforcement action in the United Kingdom has generally focused primarily on exclusionary abuses (although, more recently, the CMA has pursued a number of exploitative abuse cases relating to suspected excessive pricing).
The OFT decision in Gaviscon is notable in that it demonstrates the OFT's (and, by extension, the CMA's) willingness to grapple with novel abuses. The case concerned abusive behaviour by Reckitt Benckiser, which held a dominant position in the market for alginates and antacids. Reckitt Benckiser withdrew its Gaviscon Original product from sale to the UK National Health Service (NHS) when the product no longer benefited from patent protection, even though it remained on sale 'over the counter'. Reckitt Benckiser replaced Gaviscon Original with a similar product, Gaviscon Advance, which continued to benefit from patent protection. Because of the way the NHS computer system operated, the withdrawal of Gaviscon Original made it more difficult for doctors to prescribe alternative generic products as opposed to Gaviscon Advance. The OFT concluded that this action was expected to 'hinder the development of generic competition' to Gaviscon, thereby excluding competition from the market. Reckitt Benckiser entered into a settlement agreement with the OFT, agreeing not to challenge its decision and to pay a fine of £10.2 million.
In Cardiff Bus, the OFT investigated exclusionary behaviour preventing a competing bus company, 2 Travel, from establishing a rival service to the dominant incumbent. The case concerned both price and non-price predation. Cardiff Bus reacted to the launch of a rival 'no-frills' service by introducing its own no-frills service on the same routes, without a valid business case and running at a loss. In both Cardiff Bus and Gaviscon, the OFT uncovered evidence of anticompetitive intent.
In Remicade, the CMA considered whether a volume-based discount scheme had exclusionary effects on the market for infliximab (a class of biologic pharmaceutical products). The CMA considered whether the pricing model prevented manufacturers of biosimilar products from entering the market after MSD's patent protection on Remicade expired. The CMA carried out an analysis of the impact of the pricing model on competition and new entry, and concluded that the scheme was unlikely to result in anticompetitive effects.
The focus on exclusionary conduct is borne out by a number of other investigations, including the following.
- In December 2015, the ORR closed an investigation into Freightliner on the basis of binding commitments. The ORR had investigated the terms of Freightliner's agreements with customers for the provision of rail freight services between deep-sea container ports and inland destinations. The terms included exclusive purchasing obligations, minimum volume commitments and suspected loyalty-inducing rebates. Certain customers were also prevented from reselling capacity purchased under the contracts. Freightliner committed to remove or amend the provisions in its contracts to address the ORR's concerns. In 2019, the ORR reviewed these commitments. It found them to have been effective and concluded there was no reason to reopen its investigation into Freightliner.
- In September 2014, the CMA closed an investigation into a suspected abuse of dominance by Epyx concerning the market for vehicle service, maintenance and repair platforms on the basis of binding commitments. The CMA had investigated whether Epyx's contracts prevented customers from switching to competing suppliers.
- In June 2014, the CMA closed an investigation into suspected abuse of dominance by Certas Energy UK Limited (previously GB Oils Limited) concerning the wholesale supply of road fuels in the Western Isles of Scotland on the basis of binding commitments. GB Oils had entered five-year exclusive contracts with filling stations, preventing them from sourcing fuel from other suppliers.
- In 2011, the OFT issued a reasoned 'no grounds for action' decision in relation to Idexx Laboratories Limited, a supplier of in-clinic companion-animal diagnostic testing equipment. The OFT investigated whether Idexx had engaged in anticompetitive bundling and predatory pricing, concluding that there was insufficient evidence that Idexx's conduct was likely to restrict or impair effective competition in the relevant markets.
- In 2010, the OFT issued a similar 'no grounds for action' decision following an investigation of Flybe. The investigation followed a complaint that Flybe had engaged in predatory conduct that excluded a rival airline, Air Southwest, from certain routes. It was clear that Flybe had priced below its average avoidable costs of entry, but the OFT found that Flybe was itself a new entrant and that it was normal commercial practice for an airline in this position to operate at a loss. The situation could therefore be distinguished from the position of a dominant incumbent reacting to new entry.
Discrimination cases in the United Kingdom have also tended to focus on exclusionary conduct, and also demonstrate a focus on analysing economic effects, at least in public enforcement cases by the competition authorities. For example, in 2006 the ORR found that English, Welsh and Scottish Railway (EWS) had engaged in abusive discriminatory conduct through the prices it charged for access to its coal haulage services. The ORR found that EWS had discriminated against Enron Coal and Steel Limited (ECSL), offering prices that excluded ECSL from bidding effectively for coal haulage contracts. More recently, in SSE, Ofgem accepted binding commitments to address the provisional concern that an upstream supplier was offering discriminatory terms that favoured its own downstream business over those of competitors.
Similar concerns were considered by Ofwat in 2015 in Bristol Water and Anglian Water, and by Ofcom in 2018 in Royal Mail (discussed above). In March 2015, Ofwat closed an investigation into Bristol Water on the basis of binding commitments. Bristol Water holds a local monopoly in the upstream market for the supply and maintenance of water infrastructure. Bristol Water is also active as a 'self-lay' contractor in a contestable downstream market, installing pipes that connect to the mains supply. Bristol Water was suspected of abusing its position in the upstream market by offering discriminatory terms to other self-lay contractors. The commitments require Bristol Water to ensure functional separation between its upstream and downstream services, and to ensure that its upstream business offers equivalent price and non-price terms to third-party contractors as offered to its own downstream business.
In December 2015, Ofwat closed an investigation into Anglian Water, finding no grounds for action. This followed a statement of objections issued in December 2011 and a supplementary statement of objections in April 2014. Anglian Water has a statutory monopoly for the provision of water and sewerage services in its region. Ofwat provisionally found that Anglian Water had implemented an illegal margin squeeze when pricing its upstream services to a rival, Independent Water Networks Limited (IWN), which was competing with Anglian Water for the contract to supply a new site with water and sewerage services. Ofwat eventually concluded that, as the site developer evaluated bids for water and sewerage services on a combined basis, it was unlikely that a margin squeeze applied to sewerage services alone would have made it materially more difficult for IWN to compete for the contract.
The English courts have adopted a less economic approach to the analysis of discrimination cases.
In Purple Parking, the High Court found that Heathrow Airport had abused a dominant position by offering discriminatory terms of access to providers of valet parking services.28 Heathrow permitted its own valet parking service access to its forecourts at Terminals 1 and 3, while requiring rival service providers (including Purple Parking) to relocate from the forecourts to the car parks. The High Court held that the forced relocation of rival providers placed them at a competitive disadvantage, and that this was sufficient to demonstrate abuse. The case is unusual in that there was no requirement to show that access to the forecourts was an essential facility or that competition would be eliminated entirely.
Similarly, in Streetmap, the High Court proceeded on the assumption that, at least in principle, a dominant undertaking might commit an abuse by promoting its own products or services in a separate market over those of a rival, provided the conduct had an appreciable effect on competition in the second (non-dominated) market and was not objectively justified.29 The Court did not specifically consider whether a dominant undertaking that was not an essential facility could be required to provide access to downstream rivals on equivalent terms to those offered to its own downstream business. This question was not necessary to decide the case on the facts, and at the time overlapped with questions being considered by the EC.
The Court went further in ATS v. London Luton Airport Operations. In this case, the Court concluded that a concession agreement granted to National Express by London Luton Airport Operations that carved out easyBus from the exclusivity provisions was discriminatory against other bus operators, even though Luton Airport Operations (the upstream supplier) was not active in the downstream bus market. The Luton Airport case clarifies a question previously considered in Sel-Imperial Ltd v. British Standards Institution.30 In this case, the High Court considered an action for strike out by the British Standards Institution of an abuse of dominance claim concerning the certification of replacement vehicle parts. The High Court refused to strike out the claim because it was insufficiently clear at the time whether decisions affecting a market in which the alleged dominant undertaking was not active could constitute an abuse. The decision by the European Court of Justice in MEO/GDA also confirmed that discrimination can be abusive even where the dominant firm is not active in the downstream market in which the discrimination is felt.31
iv Exploitative abuses
While the focus of UK enforcement action has mostly been on exclusionary conduct, excessive pricing has been considered in a number of cases, including Napp Pharmaceutical Holdings Limited (OFT decision of 2001), Thames Water Utilities Ltd/Bath House and Albion Yard (Ofwat decision of 2003), and Albion Water v. Ofwat (Ofwat decision appealed to the CAT, judgment of 2006). These cases have all considered the potential exclusionary effect of pricing behaviour.
The Court of Appeal grappled with the concept of excessive pricing in 2007 in Attheraces Limited v. British Horseracing Board Limited.32 This case concerned the price at which the British Horseracing Board made available pre-race data to Attheraces for sale to overseas bookmakers. Attheraces claimed that the price charged was excessive, as well as discriminatory, amounting to a refusal to supply. Attheraces was successful at first instance, but its claim was overturned by the Court of Appeal. The Court of Appeal accepted that, in principle, prices were excessive if they significantly exceeded the economic value of the product. In assessing economic value, however, it was insufficient merely to show that prices exceeded costs by a reasonable amount, without having regard to the price customers (in this case, the overseas bookmakers) were prepared to pay. The Court also noted that there was little evidence of harm to ultimate consumers (the betting public) from the alleged excessive pricing.
More recently, the CMA has pursued a series of cases concerning excessive pricing in the pharmaceutical sector. In December 2016, the CMA fined Pfizer £84.2 million and Flynn £5.2 million for imposing unfair prices for phenytoin sodium capsules in the UK. As described above, however, the CAT quashed the decision in June 2018, remitting the case to the CMA, and the CAT's judgment was largely upheld by the Court of Appeal in March 2020. In June 2020, the CMA opened its remittal investigation into Pfizer and Flynn. The CMA is currently investigating allegations of excessive pricing in two other cases, also mentioned above, concerning liothyronine tablets and hydrocortisone tablets.
Remedies and sanctions
An undertaking that has abused a dominant position may be fined up to 10 per cent of its worldwide turnover in the previous business year, calculated according to rules set out by Statutory Instrument.33 An undertaking may be fined only if its conduct was intentional or negligent (i.e., where the undertaking ought to have known that its conduct would result in a restriction or distortion of competition).34 Any undertaking whose turnover does not exceed £50 million benefits from immunity from fines for infringing the Chapter 2 Prohibition, although immunity may be withdrawn on a prospective basis.35
The CMA is obliged to publish guidance as to the appropriate amount of a penalty (which is subject to approval by the Secretary of State). The CMA (as well as concurrent regulators and the CAT) must have regard to that guidance when imposing penalties.36 The OFT published new guidance in September 2012, following a series of successful appeals against its fining decisions before the CAT.37 The guidance, which was updated by the CMA in April 2018,38 sets out a six-step approach to calculating fines:
- calculation of a starting point by multiplying the undertaking's turnover in the relevant market by a percentage of up to 30 per cent depending on the seriousness of the infringement (under its previous guidance the maximum was 10 per cent);
- adjustment for duration;
- adjustment for aggravating and mitigating factors;
- adjustment to achieve sufficient deterrence and to ensure proportionality;
- adjustment to ensure the statutory cap (10 per cent of worldwide turnover) is not exceeded; and
- adjustment to reflect any leniency or settlement discount or approval of a voluntary redress scheme.
The CMA's guidance states that it will generally apply a starting point percentage between 21 per cent and 30 per cent of relevant turnover when considering the most serious abuses of a dominant position. Seriousness will be assessed by reference to the nature and extent of the demand for that product, the structure and size of the market, the effect on competitors (and others), the need for deterrence and the damage caused to consumers.
ii Behavioural remedies
On reaching an infringement decision, the CMA (or regulator) may give any person such directions as it considers appropriate to bring the infringement of the Chapter 2 Prohibition to an end. Directions may be enforced through the civil courts.39
The CMA and regulators also have the power to impose interim measures.40 Interim measures may be imposed only where the authority has opened a formal investigation (and therefore has 'reasonable suspicion' of an infringement) and considers it necessary to impose interim measures as a matter of urgency for the purposes of preventing significant damage, or to protect the public interest.
The OFT imposed interim measures only once (in 2006), and those measures were subsequently withdrawn. The legal threshold for the OFT to impose interim measures was one of 'serious, irreparable damage', whereas the CMA need only show the prospect of 'significant damage'. This change in the legal threshold was intended to make it easier for the CMA to impose interim measures in future. Until now, parties seeking interim relief have generally found it more effective to apply to the courts.41
The CMA has yet to impose interim measures in relation to suspected abuse of dominance. It considered and rejected an application by Worldpay to impose interim measures against Visa UK Limited in 2014.42 The CMA came close to imposing interim measures in its investigation of ATG Media's supply of live online bidding services to auction houses. In that case, the CMA received an application for interim measures relating to allegedly exclusionary practices in November 2016. In June 2017, however, shortly before the CMA was due to make a final decision on whether to impose interim measures, the CMA accepted an offer of commitments from ATG Media and closed its investigation. Dr Michael Grenfell, the CMA's Executive Director for Enforcement, referred to this case as 'an example of how, when faced with an interim measures application in a fast-moving market, we were able to resolve the problem within just over 6 months'.43
There may be greater use of interim measures, particularly in the digital sector, in future. A 2018/19 Digital Competition Expert Panel inquiry into competition law in the digital sector, commissioned by the UK government and chaired by Professor Jason Furman, recommended more frequent and quicker use of interim measures. It identified interim measures as particularly appropriate in digital markets because cases in the digital sector 'are likely to be complex but markets can move fast and tip to a winner before a final decision is reached'.44 Lord Tyrie, then-chair of the CMA, also stated in February 2019 in a public letter to the Secretary of State for Business, Energy and Industrial Strategy that increased usage of interim measures 'will be essential if the CMA is to respond to the challenges thrown up by rapidly changing markets, and to do so sufficiently quickly to prevent irreversible harm to consumer trust'.45 In July 2020, in its final report on its market study into online platforms and digital advertising (the Digital Ads Market Study), the CMA noted that new powers, 'including the ability to . . . put in place rapid interim measures pending the outcome of an investigation', are necessary in the digital sector.46 This was echoed in the Digital Markets Taskforce's final report on a new pro-competition regime for digital markets in December 2020, where it argued that the ability to impose interim measures quickly 'is essential in fast-moving digital markets where a change . . . to terms and conditions, algorithms, or an API can have immediate material consequences'.47
iii Structural remedies
It is unclear whether the CMA and regulators would have the power to impose structural remedies following a finding of abuse of dominance, and this has never been attempted. It is possible for a dominance investigation to be closed on the basis of structural, and quasi-structural, commitments. This has happened on four occasions.
In January 2013, Ofwat accepted binding commitments from Severn Trent Water, the first time it had accepted commitments in a competition case. The investigation considered whether Severn Trent Water was cross-subsidising its water analysis business, Severn Trent Laboratories, from its core regulated business. Specifically, Ofwat considered whether (as a result of cross-subsidisation) Severn Trent Laboratories was able to price below cost when competing for contracts with other providers of water analysis services. The commitments included the divestment of Severn Trent Laboratories. The decision to accept commitments in this case is notable not only because it included a structural divestment, but also because the decision to accept commitments departed from the published guidance, which states that commitments will not generally be accepted in 'serious' abuse of dominance cases, such as predatory pricing.
In Bristol Water and SSE (mentioned above), Ofwat and Ofgem (respectively) accepted quasi-structural commitments under which the suppliers agreed to introduce functional separation between their upstream and downstream businesses.
In Fludrocortisone Acetate Tablets, the CMA accepted structural commitments from Aspen that involved the divestment of its rights over 'ambient storage' fludrocortisone tablets to an independent third party and the reintroduction of its own 'cold storage' product.
The CMA also has the power to impose structural measures to address unilateral market power following a market investigation.
- In 2014, following its Private Healthcare market investigation, the CMA decided that HCA should divest private hospitals in central London (although that decision was subsequently quashed by the CAT and, after further investigation, the CMA ultimately concluded in September 2016 that ordering a divestiture would be disproportionate).
- In 2014, following a market investigation into aggregates, cement and ready mix concrete, the CC found that Hanson had exclusive rights to produce ground granulated blast-furnace slag (an input into cement) in Great Britain and forced it to divest one of its facilities to create competition.
- In 2010, the CC required BAA plc (the owner of the largest UK airports) to divest two London airports and one Scottish airport, to improve competition in the relevant markets.
The UK enforcement procedure is similar in many respects to the procedure that applies at EU level (under Regulation 1/2003). The CMA (or concurrent regulator) investigates a suspected infringement and reaches an administrative decision in the first instance. That decision is then subject to appeal. The stages of a CMA investigation are as follows.
- Investigations are usually triggered by complaints. This is not always the case, however, and the CMA is able to investigate on its own initiative. The OFT's Gaviscon investigation, for example, began after evidence was submitted by a whistle-blower.
- Before opening a formal investigation, the CMA must be satisfied that it has 'reasonable suspicion' of an infringement.48 The CMA has no power to use formal investigation powers unless this legal threshold is met. Therefore, it typically carries out 'informal' information gathering in the first instance (including seeking further information from complainants).
- As well as satisfying the legal threshold, the CMA must decide whether the case is an administrative priority, in accordance with its published prioritisation principles.49 The prioritisation principles are intended to ensure the CMA makes efficient use of its resources when deciding which cases to pursue. The High Court has upheld the CMA's right to prioritise its cases in this way, and to close investigations on administrative grounds, even after considerable investigation has been carried out.50
- Once it has opened an investigation, the CMA will publish a short notice on its website indicating in broad terms the relevant sector and conduct under investigation. It does not usually name the parties to its investigations before a statement of objections is issued. In exceptional circumstances, the CMA can decide to publish the names of the parties in its initial public notice. Exceptional circumstances include instances where a party's involvement is already in the public domain, or where the CMA considers that the potential harm to consumers or other businesses from non-disclosure is sufficient to justify disclosure.
- Provided the legal threshold for opening a case is met, the CMA has wide powers to require the production of information. It may require the production of specified documents or information, ask individuals oral questions or carry out interviews with individuals. Individuals are required to answer the CMA's questions, subject to their privilege against self-incrimination, and failure to do so can result in civil sanctions. The CMA may also carry out unannounced visits of business or domestic premises (i.e., 'dawn raids'). It may enter premises without a warrant, or it may enter and search premises with a warrant (which it can obtain from the CAT or the High Court).
- If the CMA is minded to reach an infringement decision against an undertaking, it must issue a statement of objections, setting out its case and the evidence it intends to rely on. The decision whether to issue a statement of objections must be taken by the case team's senior responsible officer. The CMA must also allow access to its case file when it issues a statement of objections. The CMA's file must contain all material relevant to the matters in the statement of objections (subject to certain redactions). Any party receiving a statement of objections has the right to submit written representations and to attend an oral hearing. The same process applies in relation to any proposed fine (i.e., the CMA will provide details of its proposed fine and allow the opportunity for written representations and an oral hearing).
- The CMA will consider entering into settlement discussions in any case where it considers that the evidential standard for giving notice of its proposed infringement decision is met.51 'Settlement' is the process whereby a business under investigation is prepared to admit that it has breached competition law and confirms that it accepts that a streamlined administrative procedure will govern the remainder of the CMA's investigation of that business's conduct, in exchange for a reduction in financial penalty. Settlement discussions can be initiated either before or after the statement of objections is issued. The CMA retains broad discretion in determining which cases to settle, and this includes the discretion whether to explore interest in settlement discussions, whether to continue or withdraw from settlement discussions and whether to settle at all. Businesses do not have a right or an obligation to settle in a given case and may withdraw from settlement discussions at any time.
- Parties can offer commitments at any stage of an investigation, although the CMA encourages parties considering commitments to offer them before a statement of objections is issued. The commitments process is similar to the EU process under Article 9 of Regulation 1/2003. There is no obligation on parties to offer commitments. If accepted, the commitments become binding and are enforceable through the courts.
- Following parties' written and oral representations, the CMA must decide whether to issue an infringement decision. This decision is taken on a collective basis by a three-member case decision group (CDG), which may include any senior CMA staff or board member or any member of the CMA panel. The senior responsible officer may not be a member of the CDG, to ensure that the final decision is taken by officials who were not involved in the decision to issue the statement of objections. The CMA may equally decide at this stage to issue a reasoned decision that it has no grounds for action. Final decisions are published (in redacted form) on the CMA's website.
- CMA infringement decisions are subject to full-merits appeal to the CAT, and subsequently to the civil appeal courts on points of law.
CMA investigations vary significantly in duration, and no statutory deadlines apply. Very broadly, a CMA investigation is likely to take around three years (from case-opening until decision), with the statement of objections being issued roughly halfway through that period.
During an investigation, disputes over procedural matters (such as deadlines for responding to information requests, or confidentiality redactions) that cannot be resolved with the case team itself may be referred to the CMA's Procedural Officer. The Procedural Officer will review the party's written application and relevant correspondence, and allow an opportunity for each side to present its views orally (which may be by telephone). The Procedural Officer will then issue a short, reasoned decision (within a target deadline of 10 working days), which is binding on the CMA. CMA procedural decisions are ultimately subject to judicial review by the civil courts.
As explained above, the CMA has the power to impose interim measures to prevent significant damage, or to protect the public interest. If the CMA is minded to impose interim measures, it must first give notice to the party in question and allow them the opportunity to make representations. Interim measures decisions are subject to appeal to the CAT.
The Consumer Rights Act 2015 also gives the CMA the power to certify voluntary compensation schemes following an infringement decision, which is intended to encourage firms to offer compensation without the need for victims to commence private litigation.
Outside an investigation, the CMA has the power to publish opinions on novel issues of competition law where it considers there is sufficient need for general guidance (e.g., because of their economic importance for consumers). The CMA has never published an opinion in relation to a question of abuse of dominance. The CMA is sometimes prepared to offer private, informal advice on an ad hoc basis, but only in exceptional cases and only where the matter in question would satisfy its case prioritisation principles. In contrast, the CMA does encourage potential complainants to approach it with possible complaints for discussion on an informal and confidential basis.
Two types of private action exist in the United Kingdom: follow-on actions and stand-alone actions.
A follow-on action is a damages action founded on an infringement decision by a UK competition authority or the EC. The court is bound by the findings of infringement already made (as well as findings of fact in the infringement decision).52 The claimant is therefore required only to show loss and causation. In a stand-alone action, the claimant must prove that the defendant infringed competition law, as well as proving that the claimant suffered reasonably foreseeable loss. Since October 2015, stand-alone actions and follow-on actions can be brought before the CAT as well as the civil courts (the High Court of England and Wales, the High Court of Northern Ireland, or the Court of Session or Sheriff Court in Scotland).53 The civil courts and the CAT have wide jurisdiction to award damages and equitable remedies, including injunctive relief, specific performance and declarations of illegality.
In the past, private claims tended to gravitate towards the civil courts, and particularly the High Court of England and Wales, for a variety of reasons. The Consumer Rights Act 2015 aimed to reverse this trend, and has arguably done so. Not only does the CAT now have the power to hear stand-alone actions and grant injunctive relief, it is also the only venue in which claimants can bring opt-out and opt-in collective actions (discussed below). Further, some cases before the CAT will qualify for fast-track review, capping the costs risk for claimants.54 The civil courts also have the power to transfer competition cases to the CAT. The CAT's procedural rules and limitation periods are now generally aligned with those that apply to the civil courts, although some questions remain over how the new rules apply to claims relating to conduct predating October 2015. Taken together, these changes are intended to make the CAT the principal venue for competition cases in the United Kingdom.
There are three forms of collective action in the United Kingdom.
- Collective actions before the CAT: since October 2015, any representative of a class of persons may bring a collective action for damages before the CAT on an opt-out basis or an opt-in basis. In either case, the claimant must obtain permission from the CAT (a 'collective proceedings order') to continue with a claim on this basis, by showing that they are a suitable representative and that the claims in question are sufficiently similar to be brought in collective proceedings.
- Group litigation orders: the High Court has the power to make a group litigation order combining claims that raise common or related issues. A group litigation order will also provide for the establishment of a group register of the claims forming the group. Judgments are binding on all parties on the group register.
- Representative actions: it is, in theory, possible for a claimant to bring an action in the High Court on behalf of all claimants with the same interest.55 Following a 2010 Court of Appeal judgment,56 however, it seems unlikely that mass representative actions will be brought in competition cases under these provisions in future, and far more likely that representative claimants will seek to launch collective proceedings before the CAT.
Damages in competition claims are intended to be compensatory: they are intended to place the victim in the position he or she would have been in had the infringement not occurred. In exceptional circumstances, where compensatory damages would otherwise be an inadequate remedy, damages might be awarded on a restitutionary basis (i.e., accounting for the profits earned unjustly by the defendant). While the Court of Appeal has accepted in principle that restitutionary damages may apply,57 they have never been awarded in practice.
UK Regulations implementing the EU Damages Directive (described in more detail in the EU chapter) came into force on 9 March 2017.58 These Regulations remain applicable as retained EU law. Although many of the provisions of the Damages Directive did not require amendment of the UK regime, and many changes relate primarily to cartel infringements, the Regulations contain several provisions that may have a bearing on UK claims for damages from abuse of dominance. For example, the Regulations: (1) address the burden of proof with respect to the passing-on defence; (2) suspend the limitation period while competition authority investigations or consensual dispute resolution processes are ongoing; (3) exclude the award of exemplary damages reversing the principle established in the Cardiff Bus case that exemplary damages were possible in dominance cases where no administrative fine had been imposed;59 (4) exempt small and medium-sized enterprises, as well as defendants that settle with the claimant, from the principle of joint and several liability; and (5) amend rules on disclosure.60
More generally, the UK has become a popular venue for private actions even where the claimant has a choice of jurisdiction. There are two principal reasons for this. First, the UK rules on disclosure of evidence are favourable to claimants (allowing access to evidence that might not be available in other jurisdictions). Second, costs are generally awarded on a 'loser-pays' basis. A successful claimant is therefore likely to recover a significant proportion of his or her costs from the defendant.
Public funding is generally unavailable for competition law actions. Other funding options are available, however. In particular, parties may enter conditional fee agreements (CFAs) with lawyers. Under a CFA, the lawyer will be paid nothing if the case is lost but will be entitled to a success fee (i.e., an uplift) of up to 100 per cent for winning the case. Competition actions in the United Kingdom may also be funded through 'after-the-event' insurance or by professional funders, although, in most cases, any uplift or after-the-event insurance premium will not be recoverable from an unsuccessful defendant. Since April 2013, claimants have also been able to instruct lawyers in High Court actions under a damages-based agreement (DBA). Under a DBA, the lawyer is entitled to a percentage of the damages awarded to a successful claimant, but receives nothing if the claim is unsuccessful. DBAs are not permitted in opt-out collective proceedings before the CAT but, in collective proceedings, the representative claimant's lawyers or funder may be allowed a share of any unclaimed damages.
The public enforcement and private litigation regimes in the United Kingdom have undergone considerable reform in recent years. While these reforms are significant from an institutional and procedural perspective, the substantive rules on dominance are unchanged. The reforms were intended to result in more competition law enforcement cases, especially in the regulated sectors, together with greater use of market investigations to tackle concerns about unilateral conduct and an increase in private litigation. The expected boost to public enforcement and private litigation (and collective actions in particular) has been slow to materialise. CMA enforcement activity increased following criticism by the NAO in February 2016, but the past few years have seen a greater focus on proceeding with existing cases and preparing for the UK's withdrawal from the EU rather than opening new cases. Other future developments are likely to involve a greater focus on competition in the digital sector and broader changes to UK competition law enforcement now that the UK has left the EU.
i Competition in the digital sector
Over the past few years, the CMA, like many competition authorities around the world, has set out plans to focus its enforcement activities on digital markets.61 Its 2021 Annual Plan states that its priorities for 2021 will include 'fostering effective competition in digital markets'. This focus will not be confined to the CMA. The 2021 Concurrency Report recognises that 'a new pro-competition framework [for] digital markets . . . cannot operate in isolation [and] will need to be joined-up and coherent with the wider regulatory landscape, in particular with sectoral regulation'.
In a 2019 letter to the Secretary of State for Business, Energy and Industrial Strategy, Lord Tyrie (then-chair of the CMA) urged government reform of competition policy, seeing it as an 'opportunity to help shape the response to the challenges that many jurisdictions now face'.62 Several of the proposals could impact on dominance investigations. To add bite to CMA information requests, for example, Lord Tyrie suggests implementation of a turnover-based fines regime for non-compliance with enforcement investigations. Where these investigations uncover concerns, more frequent use of interim measures 'will be essential if the CMA is to respond to the challenges thrown up by rapidly changing markets'. Lord Tyrie also proposes that the standard of review by the CAT (which he describes as 'a more protracted and cumbersome appeal process than was originally intended for, and by, the CAT') be lowered from a full merits review either to a judicial review or to a new standard of review. This proposal has been met with almost universal opposition among legal practitioners and businesses. The letter also suggests imposing greater restrictions on the admissibility of new evidence and less emphasis on oral testimony in CAT appeals.
The House of Lords Select Committee on Communications also published a report calling for rigorous enforcement in facilitating effective regulation of digital markets. The report describes online platforms as 'gatekeepers' for the internet, and states that 'it is appropriate to put special obligations on these companies to ensure they act fairly'.63 There is no discussion of the specific substance of these obligations, however, only that they should be created in accordance with a number of principles and enforced by a regulator. Significantly, the report recommends the establishment of a new digital authority that would report directly to the Cabinet Office. This new entity would coordinate regulators in the digital world through a number of functions, including assessing existing regulation, recommending additional enforcement powers where necessary, and assisting in the effective implementation of regulation.
Several of these suggestions were echoed in the report of the Digital Competition Expert Panel chaired by Professor Jason Furman (the Furman Report). The Furman Report frames reform of competition policy as an opportunity for the UK to set an example and 'to lead international action'.64 With respect to antitrust enforcement, two principal changes are proposed, both consistent with Lord Tyrie's proposals: greater use of interim measures and adjustment of appeal standards. The 'goal of the policy changes is not more or less enforcement but better enforcement'.65 The Report notes the lengthy duration of abuse of dominance cases and the corresponding risk that companies operating in fast-moving digital markets may go out of business before cases are concluded. Recognising that 'the powers are already sufficient in themselves',66 the Report first recommends greater use of interim measures. To facilitate this, the Report proposes streamlining the CMA's processes such that access to file in interim measures cases would be limited to documents that are 'clearly relevant' to the interim measure. The other recommendation is to change the standard of appeal to the CAT from a full merits review to a more limited judicial review. When discussing this recommendation, the Report also states that 'significant changes to the appeal standard for antitrust cases would merit a change to the current CMA decision making process to guarantee sufficient independence'.
In addition to reform of the current ex post framework, the Furman Report advocates greater emphasis on ex ante regulation. It recommends the creation of a digital markets unit to, among other functions, create a code of conduct applicable to companies that are deemed to hold 'strategic market status' (SMS). The code would set out 'acceptable norms of competitive conduct on how SMS firms should act with regard to smaller firms and consumers'. The proposal to introduce more ex ante rules is broadly consistent with Lord Tyrie's letter and the House of Lords Select Committee report, and could have a significant impact on the nature of UK competition enforcement in future, particularly in the digital sector.
In July 2019, the CMA launched its own Digital Markets Strategy. This was a response to what the CMA sees as 'profound changes being brought about by the digital economy', requiring competition authorities to 'develop a path that protects consumers while ensuring robust competitive and innovative digital markets'. The CMA sought to tackle questions around companies' use of data, whether certain platforms have market power or 'gatekeeper' status, the use of increasingly sophisticated technology to target advertising, and the risk of 'killer acquisitions'. The CMA set out several priority areas, including: (1) a market study on online platforms and digital advertising; (2) a review of the CMA's approach to reviewing digital mergers; (3) policy work to consider a possible 'digital markets unit'; (4) proposals to reform interim measures and other enforcement tools to enable swifter action; and (5) cooperation with international agencies.
In July 2020, the CMA's Digital Ads Market Study recommended 'a new pro-competition regulatory regime with strong and clear ex ante rules, which can address a wide range of concerns holistically, can be enforced rapidly by a dedicated regulatory body, and can be updated and refined as required'.67 Like the Furman Report, the Digital Ads Market Study envisaged the digital markets unit having the power to administer a code of conduct and having the power to introduce further-reaching 'pro-competition interventions'. It also developed proposals for how these tools might work.
Creating the kind of regime that the Digital Ads Market Study had in mind would require legislation. To this end, the government mandated a new unit – the Digital Markets Taskforce, drawn from staff at the CMA, the Information Commissioner's Office and Ofcom – to advise on proposals for the new regime. In July 2020, the Digital Markets Taskforce launched its call for information. It also paid 'close attention' to parallel proposals for ex ante rules for digital platforms then in contemplation by the EC under the EU Digital Markets Act.68
In December 2020, the Digital Markets Taskforce published its final report on a new pro-competition regime for digital markets.69 It too proposed a conduct regime entailing new rules applicable specifically to digital platforms that are designated as SMS firms. However, unlike the Furman Report and Digital Ads Market Study, the Digital Markets Taskforce's report did not propose substantive rules that might apply to SMS firms. Instead, it recommends that the digital markets unit should develop a series of codes setting out 'how the firm is expected to behave in relation to the activity motivating its SMS designation' with 'clear “rules of the game” up-front' that could address exploitative or exclusionary practices.70
The CMA subsequently published its 'Digital Markets Strategy Refresh' in February 2021, identifying its goal to 'establish the Digital Markets Unit as a centre of expertise for digital markets' and explaining that it expects 'to be an increasingly active enforcer in relation to digital markets', because, inter alia, cases that previously fell to the EC are now within the CMA's jurisdiction.
It is now for the government to decide whether and how to implement the Digital Markets Taskforce's proposals in legislation. These proposals have, in the meantime, received an endorsement from John Penrose MP, who was tasked by the government to consider and report on proposals to improve the functioning of the UK competition and consumer protection regimes in his independent report published in 2021 (the Penrose Report).71 However, the Penrose Report cautioned against 'regulatory creep' through the excessive use of the digital markets unit's new powers, and suggested the new unit be named Network & Data Monopolies Unit instead (to reinforce the point that its powers only apply to individual firms that own and run new network and data monopolies).
On 7 April 2021, the Digital Markets Unit was launched by the CMA to, inter alia, 'promote online competition and crackdown on unfair practices'.72 The government will seek to 'legislate to put [the Digital Markets Unit] on a statutory footing as soon as parliamentary time allows'.73 The government has also agreed in principle with the recommendation to develop a code that is 'mandatory and enforceable', although 'more work is required to understand the likely benefits, risks and possible unintended consequences of the range of proposed pro-competitive interventions'.74 The government has also committed to consult on proposals for a new pro-competition regime in 2021.75 In the meantime, the CMA noted in its 2021 Annual Plan that it would continue to 'use [its] existing tools effectively and efficiently to address problems in digital markets'.
ii Expanded role for the CMA
The CMA's responsibilities will inevitably increase following the UK's withdrawal from the EU. In addition, the Penrose Report further recommended an expanded role for the CMA, by giving it responsibility for the overall progress of competition, consumer rights, supply-side reforms and productivity improvements, with a view to the CMA becoming 'a micro-economic sibling for the Bank of England's well-established public macro-economic role'.76 For example, the CMA would gain the power to determine that a business has violated consumer law – and impose fines directly – rather than having to apply to courts for cease-and-desist orders.
In addition, the Penrose Report also envisages a greater role for the CMA in regulated sectors. While existing sectoral regulators with concurrent competition powers should continue to strive to increase competition in their respective sectors, once these sectors return to '“normal” pro-consumer . . . market',77 responsibility should be transferred to the CMA, leaving sectoral regulators with responsibility only for the core assets of 'network monopolies' such as gas pipes, electricity grids, railway tracks or water and sewage pipes. In time, the Penrose Report envisages the role of sectoral regulators being entirely subsumed by the CMA (although this could take several years).
While these recommendations to expand the role of the CMA may be controversial, and are not binding on the CMA or the government, they may prove influential as the government considers what shape the UK competition regime should take outside of the EU framework.
1 Paul Gilbert is a partner and John Messent is a senior attorney at Cleary Gottlieb Steen & Hamilton LLP. They are grateful for the assistance of their colleague, Louie Ka Chun.
2 Article 92 of the UK Withdrawal Agreement.
3 In February 2021, the UK government published proposals to reform the role of NHS Improvement, which would include removing its competition powers.
4 The investigation procedures followed by the sectoral regulators differ in some respects from the UK Competition and Markets Authority's (CMA) procedures.
5 Section 46 of the Act.
6 See, for example, 'UK Competition Law enforcement: the post-Brexit future', 11 June 2019, where Dr Michael Grenfell states 'The CMA was prepared and ready to take on its new expanded post-Brexit functions. . . . To get to this position, the CMA has spent the period since the referendum in planning for its expanded role, recruiting additional staff, setting up systems, drafting guidance and assisting the Government in the development of policy and legislation.'
7 CMA v. Flynn Pharma Ltd and others (2020) EWCA Civ 339.
8 Case C-307/18, Generics (UK) Ltd and Others v. CMA.
9  CAT 11.
10 CMA v. Flynn Pharma Ltd and others (2020) EWCA Civ 339.
11 Case C-27/76, United Brands v. CMA.
12  CAT 20.
13 Network Rail Infrastructure Limited v. Achilles Information Limited  EWCA Civ 323.
14  CAT 11.
15 Unwired Planet v. Huawei  UKSC 37.
16 Case C-170/13, Huawei Technologies Co. Ltd v. ZTE Corp., ZTE Deutschland GmbH.
17 Case T-691/14, Servier SAS and others v. Commission.
18 Secretary of State for Health and others v. Servier Laboratories Ltd and others  EWHC 1004 (Ch).
19 Secretary of State for Health and others v. Servier Laboratories Ltd and others  EWCA Civ 1096.
20 Secretary of State for Health and others v. Servier Laboratories Ltd and others  UKSC 44.
21  CAT 4.
22 Mastercard Incorporated and others v. Walter Hugh Merricks CBE  UKSC 51.
23 UK Withdrawal Agreement (October 2019), Article 92. EU law continued to apply in the UK during the transition period from 31 January until 31 December 2020. The European Commission (and other EU institutions) continues to have jurisdiction over any cases formally opened before the end of the transition period.
24 European Union (Withdrawal) Act 2018, Section 2. Retained EU law may be modified by secondary legislation to the extent necessary to take into account its new domestic context (European Union (Withdrawal) Act 2018, Section 8). The power of certain appeal courts to depart from retained EU law is set out in the European Union (Withdrawal) Act 2018 (Relevant Court) (Retained EU Case Law) Regulations 2020 SI 2020/1525.
25 This point was underlined by the High Court in Purple Parking Limited v. Heathrow Airport Limited  EWHC 987 (Ch).
26 In Strident Publishing Limited v. Creative Scotland  CAT 11, the Competition Appeal Tribunal (CAT) found that the defendant, a public authority exercising powers derived directly from legislation and under the control of the Scottish government, was not carrying out an economic activity as an undertaking when providing grants to publishers.
27 National Grid plc v. GEMA,  EWCA Civ 114. In Royal Mail v. Ofcom  CAT 27, though, the CAT determined, first, that the conduct at issue was not 'competition on the merits'; for example, by competing on price or quality of service. The conduct was found instead to be an attempt to reserve the relevant market to Royal Mail, thereby generating revenues to fund Royal Mail's universal service obligations. Having established a deviation from competition on the merits, the CAT went on to assess the likelihood of anticompetitive effects.
28 Purple Parking Limited v. Heathrow Airport Limited  EWHC 987 (Ch).
30 Sel-Imperial Ltd v. The British Standards Institution  EWHC 854 (Ch).
31 Case C-525/16, MEO/GDA.
32  EWCA Civ 38.
33 Section 36 of the Act, and the Competition Act 1998 (Determination of Turnover for Penalties) Order 2000 (SI 2000/309), as amended by the Competition Act 1998 (Determination of Turnover for Penalties) (Amendment) Order 2004 (SI 2004/1259).
34 Napp Pharmaceutical Holdings Limited and Subsidiaries v. Director General of Fair Trading  CAT 1, Paragraph 457.
35 Section 40 of the Act.
36 Section 38(8) of the Act.
37 In connection with the Office of Fair Trading's (OFT) infringement decisions concerning: (1) bid-rigging arrangements in the construction sector; and (2) cartel behaviour by recruitment agencies.
38 CMA's guidance as to the appropriate amount of a penalty, CMA73.
39 Sections 33 and 34 of the Act.
40 Section 35 of the Act.
41 See, for example, Dahabshiil Transfer Services Limited v. Barclays Bank plc and Harada Limited and Berkeley Credit And Guarantee Limited v. Barclays Bank plc  EWHC 3379 (Ch). This case concerned an alleged abuse of dominance by Barclays, which withdrew certain money-servicing activities from the claimant. The High Court granted an interim injunction, subject to standard cross-undertakings in damages, requiring Barclays to continue providing the services to the claimant pending a full trial. See also Preventx Limited v. Royal Mail Group Limited  EWHC 2276 (Ch) (as described above). By contrast, interim relief was refused by the High Court in Bruce Baker v. The British Boxing Board of Control  EWHC 2074 (QB).
42 See CMA press release of 27 March 2015.
43 'UK competition enforcement – where next?', 29 November 2017, available at http://www.gov.uk/government/speeches/uk-competition-enforcement-where-next.
44 Report of the Digital Competition Expert Panel, 'Unlocking digital competition', 13 March 2019, p. 14.
45 Letter from Andrew Tyrie of 21 February 2019, p. 8.
46 Digital Ads Market Study, 'Online platforms and digital advertising market study final report', 1 July 2020, Paragraph 7.98, available at https://assets.publishing.service.gov.uk/media/5fa557668fa8f5788db46efc/Final_report_Digital_ALT_TEXT.pdf
47 Digital Markets Taskforce, 'A new pro-competition regime for digital markets', Paragraph 4.98.
48 Section 25 of the Act.
49 CMA16, April 2014.
50 R (ex p. Cityhook) v. OFT  EWHC 57.
51 In the past, settlement was formally referred to as 'early resolution'.
52 As clarified in The Secretary of State for Health and others v. Servier Laboratories Limited and others  UKSC 44, factual findings made by the General Court that are not integral to the General Court's judgment and that do not form part of the ratio decidendi are not binding as res judicata on UK courts, and such factual findings cannot be deployed in a wholly different context than that in the judgment.
53 Before October 2015, the CAT did not have jurisdiction to hear stand-alone actions.
54 See, for example, Socrates Training Limited v. The Law Society of England and Wales  CAT 10, judgment (costs capping) of 21 June 2016.
55 Civil Procedure Rule 19.6.
56 Emerald Supplies Ltd v. British Airways plc  EWCA Civ. 1284.
57 Devenish Nutrition Ltd v. Sanofi-Aventis SA (France) & Ors  EWCA Civ. 1086.
58 The Claims in respect of Loss or Damage arising from Competition Infringements (Competition Act 1998 and Other Enactments (Amendment)) Regulations 2017 (No. 385).
59 See 2 Travel Group plc (in liquidation) v. Cardiff City Transport Services Limited  CAT 19, judgment of 5 July 2012. In 2008, the OFT issued an infringement decision, finding that Cardiff City Transport Services Limited (trading as Cardiff Bus) had engaged in predatory behaviour in the supply of local bus services in the Cardiff area. No fine was imposed on Cardiff Bus because its turnover fell below the statutory threshold for immunity from fines. However, a rival bus company, 2 Travel, which had exited the market (and was by now in liquidation), sought follow-on damages in the CAT under several heads. The CAT found that Cardiff Bus was liable for 2 Travel's loss of profit of around £34,000 (plus interest), but that the other claimed losses had not been proven. The CAT nevertheless awarded exemplary damages of £60,000 (almost tripling the total damages awarded), on the basis that Cardiff Bus's abusive conduct had been calculated to make a profit that was likely to exceed the compensation payable to the claimant.
60 For further detail and analysis, see 'The UK Implements the EU Antitrust Damages Directive', Cleary Gottlieb Alert Memorandum, 10 January 2017, available at: http://www.clearygottlieb.com/news-and-insights/publication-listing/the-uk-implements-the-eu-antitrust-damages-directive.
61 Consumer Green Paper: 'Modernising Consumer Markets', 11 April 2018.
62 Letter from Andrew Tyrie of 21 February 2019, p. 3, available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/781151/Letter_from_Andrew_Tyrie_to_the_Secretary_of_State_BEIS.pdf.
63 'Regulating in a digital world', 9 March 2019, p. 45, Paragraphs 171–72, available at: https://publications.parliament.uk/pa/ld201719/ldselect/ldcomuni/299/299.pdf.
64 Report of the Digital Competition Expert Panel, 'Unlocking digital competition', 13 March 2019, p. 16, available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785547/unlocking_digital_competition_furman_review_web.pdf.
65 id., p. 84.
66 id., p. 104.
67 Digital Ads Market Study, 'Online platforms and digital advertising market study final report', Paragraph 73 of the Summary.
68 Digital Markets Taskforce, 'Call for Information', 1 July 2020, Paragraphs 1.4 and 2.7. The European Commission's proposals were published on 15 December: see Proposal for a Regulation on contestable and fair markets in the digital sector (Digital Markets Act), SWD(2020) 364 final.
69 Digital Markets Taskforce, 'A new pro-competition regime for digital markets', 8 December 2020, available at: https://assets.publishing.service.gov.uk/media/5fce7567e90e07562f98286c/Digital_Taskforce_-_Advice.pdf.
70 id., Paragraph 4.5.
71 John Penrose MP, 'Power to the people: independent report on competition policy', 16 February 2021, p. 29 (the Penrose Report) (noting the announcement 'that a new digital markets unit will be created in CMA with powers to create extra-strong upfront (“ex-ante”) regulations to deal with them properly. This is exactly the right thing to do, because the entire economy is digitising, and therefore any sector could potentially see entrepreneurial firms emerging to create new digital network monopolies at any time. Sitting the new unit inside CMA will not only ensure it can spot and deal with new threats to strong competition no matter where they emerge, but will also make sure the unit doesn't hollow out CMA itself as every sector of our economy becomes a digital one.').
72 CMA, Press Release: 'New watchdog to boost online competition launches', 7 April 2021.
73 Department for Business Energy & Industrial Strategy and Department for Digital, Culture, Media & Sport, Response to the CMA's market study into online platforms and digital advertising, November 2020, Paragraph 22.
74 id., Paragraphs 25 and 28.
75 id., Paragraph 29.
76 The Penrose Report, p. 15.
77 id., p. 62