UK: Landmark Court Of Appeal Judgment - Could You Unknowingly Be A Party To A Price Fixing Agreement?

Last Updated: 8 March 2007
Article by Andrij Jurkiw

The Court of Appeal recently ruled that customers who discuss their future pricing intentions with their suppliers run the risk of being accused of price fixing.

This judgment follows the appeals made by Argos, Littlewoods and JJB Sports against decisions of the Competition Appeal Tribunal ("CAT"). Although the ruling is of particular relevance to the retail sector, the findings are of much more widespread application as they further clarify what needs to be demonstrated by a Competition Regulator in order to "convict" a business of participating in an unlawful price fixing agreement.

Background to the Appeal in the Toys case

On 19 February 2003 the Office of Fair Trading ("OFT") issued a decision claiming that Hasbro, Argos and Littlewoods had been involved in an anti-competitive agreement or concerted practice to fix the prices of certain Hasbro toys and games. The OFT claimed, in this decision, that Argos agreed with Hasbro that it would follow Hasbro's RRPs provided that Littlewoods also agreed to do the same. Argos was fined £17.28 million, Littlewoods was fined £5.37 million and Hasbro escaped a fine because it was granted 100% leniency despite the fact that there was evidence that it was the instigator of the price fixing arrangement.

This decision was appealed to the Competition Appeal Tribunal ("CAT") in April 2003. At the early case management conferences, the OFT effectively conceded that the evidence it had relied on in its decision was insufficient to justify the findings of infringement and sought leave from the CAT to introduce three new witness statements recently given by employees or ex employees of Hasbro. Despite protestations from Argos and Littlewoods, the CAT ordered that the three new witness statements were to be admitted in evidence but were to be the subject of a new Rule 14 procedure. This led to the issuing of a new OFT decision on 21 November 2003 which relied heavily on the new evidence contained in the three additional witness statements.

This new OFT decision was then the subject of an Appeal hearing before the CAT in May 2004 and the CAT issued its judgment on liability on 14 December 2004.

The CAT upheld the OFT's new decision and relied on its earlier ruling in the Replica Kits case to justify the finding that there was a trilateral concerted practice between Hasbro, Argos and Littlewoods. The CAT held that Argos had passed information about its future pricing intentions to Hasbro, which it had subsequently used to influence other retailers' conduct in the market, and Hasbro had fed back information to Argos which Argos knew was based on information Hasbro had received from other retailers. In its Penalty Judgment issued on 29 April 2005, the CAT reduced the penalty on Argos to £15 million and the penalty on Littlewoods to £4.5 million due to errors in the OFT's penalty calculation.

The CAT's judgment was subsequently appealed by Argos and Littlewoods to the Court of Appeal both on points of law and on the level of the penalty.

Points of Issue before the Court of Appeal

There were four key grounds of appeal in the Toys case namely:

  1. The CAT had incorrectly concluded that there was a trilateral concerted practice to fix prices between Argos, Hasbro and Littlewoods. It was claimed that the CAT failed to find the requisite consensus between Argos and Littlewoods that they would each price at or near Hasbro's RRPs;
  2. The CAT wrongly characterised the offence as a price fixing agreement and should have considered whether the evidence merely demonstrated the existence of a price information exchange – which the CAT would then need to show had been entered into for some anti-competitive purpose;
  3. The CAT erred in its penalty calculation by failing to have regard to the OFT's Guidance on the calculation of the level of the penalty. In particular, it and the OFT failed to properly define the relevant product market for the purpose of calculating the "starting point"; and
  4. The CAT should have reduced the penalty imposed on both Argos and Littlewoods on the ground that the OFT had unlawfully discriminated between these two parties and Hasbro by granting Hasbro 100% leniency in circumstances where, according to the OFT's own guidance, it should only have been entitled to a maximum 50% leniency.

Court of Appeal’s Judgment - 19 October 2006

The key points made by the Court of Appeal were as follows:

  1. There must be a mental consensus between two or more parties for a concerted practice to exist;
  2. Discussions between a supplier and a customer about possible prices or about historic prices can lead to discussions of future prices and agreement as to what such future prices should be;
  3. The CAT had gone too far in its statement about how a concerted practice could arise. The correct statement of the law is as follows: where retailer A discloses to supplier B its future pricing intentions in circumstances where A may be taken to intend that B will make use of that information to influence market conditions by passing that information to other retailers (of whom C may be one) and B does, in fact, pass the information to C in circumstances where C may be taken to know the circumstances in which the information was disclosed by A to B and C then makes use of that information in determining its future prices, then A, B & C are all party to a concerted practice;
  4. The CAT is not required to follow the OFT's Guidance on the appropriate level of the penalty; and
  5. Argos and Littlewoods may well have been treated unequally and be entitled to a 50% reduction in their penalty because of the OFT's potentially unjustified grant of 100% leniency to Hasbro.


Although the appeals relating to the level of the penalty are of interest, the most important aspect of this case relates to the nature of the evidence which needs to be adduced in order to demonstrate an anti-competitive agreement or concerted practice. It was clear from the Bayer case that a concurrence of wills was required in order for there to be an agreement.

The Court of Appeal has now clarified that such a consensus or meeting of minds is also required in order for there to be a concerted practice. Sadly, the Court of Appeal did not take this opportunity to clarify the position in relation to information exchange agreements (i.e. exchanges of commercially confidential information between competitors) and whether such an agreement, on its own, without clear evidence of intent to restrict or distort competition, is sufficiently strong and compelling evidence of an anti-competitive arrangement.

The OFT certainly appeared to assume that because information about prices had been exchanged, there must have been an agreement to fix prices. It did not adduce any clear evidence that Argos committed to price specific toys at Hasbro's RRPs provided Littlewoods agreed to do the same.

In fact, both the OFT and the CAT accepted that there was no certainty and no guarantee that Argos would price at RRPs.

Furthermore, the evidence relied on by the OFT and the CAT specifically stated that the discussions between Argos and Hasbro about RRPs did not involve going down a list of products and Argos indicating which products it was prepared to price at RRP.

As for the clarification about when a concerted practice may arise, this is to be welcomed. However, in order for there to be a mental consensus between A & C, surely you must have to show that A intended its pricing intentions be revealed to C? There is no evidence that Argos specifically intended its pricing intentions be disclosed to Littlewoods and no evidence that Littlewoods specifically intended its pricing intentions be disclosed to Argos.


This case should be a cause for concern for any business which routinely discusses prices with its suppliers or its customers. The conduct of Argos and Littlewoods was far removed from that of the classic, horizontal price fixing cartel. It was Hasbro who came up with the initiative to persuade retailers to price at the RRPs, in response to retailers' complaints about low margins, and yet Argos and Littlewoods were fined as if they had sat down in a smoke filled room and deliberately agreed to fix prices. There was very little specific evidence (in terms of detailed notes/minutes of meetings or conversations during which prices were discussed) and virtually all of the material used to "convict" Argos emanated from third parties – some of which only emerged after Argos appealed the original OFT Decision. Businesses need to take stock of this decision and consider what mechanisms can be put in place to protect themselves from accusations of price fixing. Compliance programmes may need to be altered, high risk areas of the business audited and refresher training undertaken to warn employees of the ramifications of this judgment. If businesses merely continue to routinely discuss prices as before, the prospects of significant fines await them together with the possibility of director disqualification, even imprisonment for executives, in addition to the possibility of third party damages claims.

The choice is up to you!

© Burges Salmon LLP 2006. All rights reserved.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.