The Competition and Markets authority (CMA) was created in 2013 with the mission to strengthening business competition and preventing and reducing anti-competitive activities.
Combining the responsibilities of the former Competition Commission and the Office for Fair Trading, the CMA investigates and prosecutes cases concerning consumer protection, commercial cartels and other anti-competitive behaviour such as market manipulation and price fixing.
Although the majority of their powers are derived from civil law, the CMA has the power to bring criminal proceedings.
Hickman & Rose have significant experience representing companies and individuals in the civil and criminal context who are subject to CMA investigations and enforcement.
The evidential hurdle for starting a new CMA investigation is low. Under section 25 of the Competition Act 1998, the CMA can start an investigation if it has ‘reasonable grounds for suspecting’ that a current or previous ‘agreement’ may affect – or intend to effect – trade within the United Kingdom or EU member states. It is well established in case law that ‘suspicion’ is a lower standard than ‘belief’.
This low threshold means that the door can easily be opened to the CMA’s wide ranging and invasive of investigative powers. These powers include the ability to compel businesses and individuals to provide documents, information or to answer questions on ‘any matter relevant to the investigation’ (section 26A(1) Competition Act).
The CMA’s investigators search both business and domestic premises either with or without a warrant. ‘Documents’ are defined widely to include ‘information recorded in any form’. Partly as a result of this broad-brush definition, any person or organisation caught up in an CMA investigation can find easily find themselves overwhelmed. The volume of material that must be gathered to comply with a CMA request can be vast.
However, the CMA’s powers to obtain information do not extend to documents subject to legal professional privilege. Anyone seeking to exclude material from a CMA data haul should to seek expert legal advice on how to ensure that such material is filtered out.
Individuals can find themselves faced with questions from the CMA long after they have left a specific business or role. The Competition Act defines a person’s ‘connection’ with a business as including current or former directors, partners, managers, and temporary employees, including consultants. As well as criminal liability, directors can face disqualification.
Although the CMA can ask questions of a wide range of people, no individual can be forced to answer questions which may incriminate them in subsequent criminal proceedings.
However, any response to questions asked by the CMA in their investigative functions are admissible in court unless a person makes a statement in evidence which is inconsistent with that which they previously gave the CMA as part of a requirement to answer questions.
Companies risk significant fines for failing to comply with requirements imposed by the CMA without reasonable excuse. Individuals also risk criminal liability if they obstruct an investigation, destroy or falsify documents or provide false or misleading information.
A specific criminal cartel offence was created by section 188 of the Enterprise Act 2002. This statute gives the CMA a wide range of powers to investigate and prosecute cartel offences, many of which are analogous to the powers granted to other prosecutors, including only bringing prosecutions which carried a reasonable prospect of conviction and were in the public interest.
Any resulting prosecution will take place in the criminal courts, carrying the threat of a custodial sentence. It is vital that any person who is subjected to a CMA investigation can ensure that the CMA are deploying their powers appropriately, and that any case which reaches court is supported by sufficient evidence and disclosure so that the subject can fully prepare their defence.
Hickman & Rose has long experience representing clients accused in some of the UK’s most serious financial crime and regulatory matters. The firm’s lawyers are equally adept defending matters in the criminal courts to litigating civil matters. We have the strength and depth of experience to help clients decide how best to engage with an active or potential CMA investigation.
One of the firm’s key strengths is the ability to ensure the CMA deploys its powers in full compliance with its legal obligations, and also to limit the demands made upon clients to sensible and legally compliant parameters.
Our lawyers recognise that a CMA investigation can severely damage a client’s commercial reputation, regardless of the outcome, and always factor this into the litigation strategy.
The fact that the CMA often share information with other enforcement agencies including as the Serious Fraud Office means we are highly experienced in responding to requests for information from both agencies, whether under the Competition Act or section 2 of the Criminal Justice Act 1987.